Trump Speech Suggests Pharma Tariffs Incoming

Just as the industry breathed a sigh of relief after seemingly dodging tariffs on pharmaceuticals, Trump announced at the National Republican Congressional Committee there would “very shortly be a major tariff on pharmaceuticals.”

No further details were given, but The Economic Times in India reported that Trump said: “Tariffs on pharma will be there because we don't make our own pharma drugs; they are made in another country. The same packet in the US is priced at USD 10 or more. We are going to tariff pharma in such a way that companies will come rushing to us very soon. The advantage we have is, we are very big market. Very shortly, will announce a major tariff on pharma, and when these companies hear that, they will leave China and other countries because most of their products are sold here. And, they will be opening their plants here.”

Many leaders in the pharmaceutical industry were already anticipating some form of tariffs for the sector. Speaking in an interview with the BBC, Eli Lilly chair and CEO David Ricks suggested that tariffs will eventually hit – and will have damaging consequences. He said, "We don't support tariffs, to be clear. In pharma, about 70% of global R&D takes place in the United States. So we're creating the next generation of breakthroughs and cures,” he said. "But the production is heavily weighted outside the US.”

Trump has been vocal on his desire for companies to move manufacturing operations to the US, but pharma facilities take a significant amount of time to set up. Speaking with Reuters, BMO Capital Markets analyst Evan Seigerman said, “Given the complexity of the pharma supply chain, we do not expect the industry to make any major changes. These current tariffs are being pursued under emergency powers, which at worse will last until the end of the current administration and could end sooner with an act of Congress.”