Trump's Pharmaceutical Tariff Order
President Trump has signed an executive order imposing tariffs of up to 100% on branded pharmaceutical drugs and their active pharmaceutical ingredients, targeting companies that have not agreed to lower prices for US consumers. The White House framed the measure as leverage to extract pricing concessions from an industry that has long charged Americans more than patients in other developed markets.
The tariff regime is structured to reward compliance. Drugmakers or their home countries that reach pricing deals or commit to US manufacturing investment can secure sharply reduced rates or full exemptions, according to the Wall Street Journal. The administration is effectively using the threat of prohibitive import duties as a negotiating instrument rather than a blunt revenue tool.
The scope is deliberately narrow in terms of volume but broad in terms of value. Generic drugs, which account for more than 90% of all medicines sold in the United States by unit, are exempt from the tariffs for at least one year, according to the Guardian. Orphan drugs, veterinary products and certain specialty medicines are also exempt if they originate from countries that have trade agreements with the US or satisfy urgent public health criteria.
Branded drugs, however, represent the commercially significant portion of pharmaceutical revenue. The largest US and European pharmaceutical companies derive the bulk of their profits from patented, branded treatments, many of which are manufactured outside the United States or rely on active ingredients sourced from India and China.
The order also adjusts existing duties on steel and other metals, according to Politico, though the pharmaceutical provisions drew the bulk of market attention. Pharma stocks retreated on early reports of the tariff plan before the executive order was formally signed.
