The news came in much the same way as previous tariff bombshells from the US president had — suddenly, via social media, and with much left unclear.
In a post on his social media site late on Thursday, Donald Trump announced steep new tariffs on US pharmaceutical imports.
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” he wrote on Truth Social.
So far, pharmaceutical goods have been exempt from the so-called reciprocal tariffs Trump announced back in April. That was mainly because earlier this year, the US government opened a national security probe examining the possibility of tariffs on pharma goods.
Trump has regularly threatened that pharmaceutical products would be hit with tariffs since returning to office in January so the move itself is not a major surprise, even if the timing is.
What exactly will the move mean for drugs companies?
There were two possible exemptions in Trump’s announcement. He said the tariffs will not apply to so-called generic drugs, apparently meaning drugs and pharmaceuticals that use the same ingredients and are used in the same way as existing, branded drugs, originally covered by chemical patents.
However, Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, says the distinction between branded and generic drugs is not entirely clear because there can be a “big difference.”
“There’s a lot of branded, generic drugs for example. That all seems to be smashed together in Trump’s announcement. At this stage, we just don’t know how it will play out,” she told DW.
The other distinction Trump announced is that the tariffs will not apply to companies that produce drugs in the US or who plan to build factories there.
He wrote that “IS BUILDING” will be defined as “breaking ground” and/or “under construction.” Therefore, there will be “no Tariff on these Pharmaceutical Products if construction has started,” he added.
Elms says this carve-out could be significant but emphasized that because all there is to go on so far is a social media post from Trump.
If she were a pharma executive now she would be “buying a shovel and digging a hole somewhere,” she suggested, in order to declare that her company had broken ground and was “preparing for a factory development.”
“It’s unclear what would be sufficient to avoid tariffs. They could come up with a lot of criteria that either qualifies or disqualifies. I can imagine that there will be a lot of confusion over this,” said Elms.
Neil Shearing, Capital Economics’ group chief economist, believes the announcement “is not quite as big a move as it appears at first sight” because the exemption for firms producing within the US is “more significant.”
“Many of the world’s largest pharmaceutical companies either already have some production in the US or have announced plans to build production in the near future. This would appear to make them exempt from the new tariffs,” Shearing wrote in a note to clients.
Several large pharmaceutical companies have recently pledged to begin new construction in the US, such as Eli Lilly, AstraZeneca, Roche Holding and GSK.
A report by US business daily Wall Street Journal earlier this month identified more than a dozen drugmakers which had pledged to spend more than $350 billion (€299 billion) collectively by the end of this decade on drugmaking and related activities within the US.
Which countries will be worst affected?
According to the United Nations Comtrade Database, the US imported around $213 billion worth of pharmaceutical products in 2024.
Data from the MIT Observatory of Economic Complexity identified Ireland, Germany, Switzerland, Singapore and India as the top five exporters of pharmaceuticals to the US in July 2025. The EU accounts for around 60% of all US pharma imports.
However, it is unclear how pharmaceutical firms operating from Ireland, Germany or other EU nations will be impacted. That’s because when details of the US-EU trade agreement were released in late August, it appeared that EU pharma tariffs would be limited to 15%, in line with most other tariffs in the deal.
Simon Harris, Ireland’s Minister for Foreign Affairs and Trade, announced he would be “studying the impact of this announcement” but stressed that the August trade agreement made clear that tariffs on pharma products would be capped at 15%. “This remains the case,” he said in a press release.
Ken Peng, head of Asia investment strategy at Citi Wealth, thinks the generic drugs exemption would be “good news for the likes of India and China, who mostly do not provide branded drugs to the US market.”
However, Nathalie Moll, director general of the European Federation of Pharmaceutical Industries and Associations, believes the new tariffs will “increase costs, disrupt supply chains and prevent patients from getting lifesaving treatments,” as she said in a statement.
Following the announcement on Thursday, shares in Asian and European pharma companies fell.
What about US consumers?
Trump has long claimed that tariffs would boost US consumers. But Deborah Elms argues that for various reasons, that will not be the case, and patients are about to “pay an awful lot more money” for pharmaceutical products.
Admitting that there could be some “long-term benefits” to homeshoring pharma production “such as securing supply,” she says high US production costs mean it often makes sense for pharmaceuticals to be made elsewhere.
And so she expects “higher costs for US patients,” and less pharma imports from abroad.
“In many cases, they will not reach US patients at all. So…it’s also access issues. What is the benefit of this from a consumer perspective? Almost none.”
Edited by: Uwe Hessler
Source link
