President Donald Trump plans to start with a “small tariff” on pharmaceutical imports before ramping duties up to 250% within a year and a half.
President Donald Trump has once again threatened the pharma industry with tariffs, telling CNBC on Tuesday that levies on the sector could hit a high of 250%.
Speaking on the station’s Squawk Box segment, Trump said that pharma imports would initially be subject to a “small tariff” without specifying a number, which will ramp up to 150% and then to 250% within “one year, one and a half years, maximum.” These new rates will be announced “within the week or so,” Trump added, alongside duties on semiconductors.
“We want pharmaceuticals made in our country,” he told CNBC.
Trump has made the threat of tariffs a cornerstone of his trade policy, hoping to incentivize pharma companies to raise their domestic manufacturing investments. Last month, Trump said that he wanted to tariff pharma imports at a “very, very high rate, like 200%.” The Department of Commerce, under Secretary Howard Lutnick, launched a Section 232 probe in April on imported pharma products and their potential threats to national security. Reporting from Endpoints News last week noted that the investigation could be completed as early as the start of August, but no such news has yet come out.
Also last week, Trump reached a trade deal with the European Union, under which pharma imports will come with a 15% tariff. Some analysts, including ING’s Diederik Stadig and Bernstein’s Courtney Breen, warned that these levies could add billions to the industry’s expenses. Meanwhile, Jefferies wrote in a July 28 note that the 15% duty is “’less bad’ than expected” and that its impact will be “manageable” overall.
Many companies are scrambling to beef up their U.S. supply chains, as well as announcing multi-billion manufacturing packages in the country in recent months. Leading the pack is Johnson & Johnson, which currently has the biggest commitment of $55 billion, announced in March. Roche and AstraZeneca are tied at second place, each investing $50 billion into their U.S. footprints. Eli Lilly, Sanofi and Takeda, among other Big Pharma companies, have also announced U.S.-based commitments.
Aside from tariffs, Trump in May also revealed his Most Favored Nation drug pricing policy in an attempt to bring down the cost of drugs to the same level as they are in other similarly developed countries. Late last week, the President wrote to 17 pharma companies—including Novo Nordisk, Eli Lilly, Novartis and Merck—asking them to comply with the MFN policy “within the next 60 days.”
Both policy items have been a big talking point on second quarter earnings calls, though most pharma CEOs have been tight-lipped about the potential impacts.
