President Donald Trump in a Tuesday address to a joint session of Congress confirmed that the U.S. will impose reciprocal tariffs on countries charging higher duties on American imports, starting April 2.
“Other countries have used tariffs against us for decades and now it’s our turn to start using them against those other countries,” Trump said. “On average, the European Union, China, Brazil, India, Mexico and Canada — have you heard of them? — and countless other nations charge us tremendously higher tariffs than we charge them.”
Under his policy, Trump said “whatever they tariff us, other countries, we will tariff them,” while adding that if these nations “do nonmonetary tariffs to keep us out of their market, then we will do nonmonetary barriers to keep them out of our market.”
Trump’s remarks were a reiteration of his Feb. 21 memo directing agencies to equalize U.S. tariff levels with the duties and non-tariff barriers imposed by other countries. While Trump’s address to Congress on Tuesday made no specific mention of pharmaceuticals, he threatened earlier that month to impose 25% tariffs on foreign-produced drugs.
On Tuesday, Trump’s 25% tariffs on imports from Canada and Mexico took effect, with the 10% tariff on Chinese imports now doubled to 20%. All three countries announced they would counter the president’s orders.
While Trump’s tariffs on Canada, China, and Mexico are not likely to impact Pfizer, CEO Albert Bourla in an interview with CNBC last month said the company’s manufacturing operations in Europe could be negatively impacted if the Trump administration imposes import tariffs on pharmaceuticals from the European Union.
On Monday, Bourla told the TD Cowen Annual Health Care Conference that if the Trump administration imposes tariffs on pharmaceuticals, Pfizer will transfer some of the company’s overseas manufacturing to its 13 U.S. sites.
Celltrion in a notice to shareholders last month said it updated the company’s response strategy in the event that Trump implemented reciprocal tariffs on pharmaceuticals. The South Korean manufacturer and exporter of biosimilars announced it has transferred about nine months’ worth of inventory for its products scheduled for U.S. sale in 2025.
Additionally, Celltrion said it has secured additional production capacity through negotiations with contract manufacturing organizations to minimize the impact of potential drug tariffs for 2025.
“We have been reviewing in detail the acquisition of a pharmaceutical raw material production facility in the United States since last year, and we plan to finalize the investment decision within the first half of this year,” Celltrion said.
Eli Lilly announced last week that it is investing $27 billion to build four new U.S. pharmaceutical manufacturing sites. Lilly’s investment in American infrastructure comes as Trump has pressured drugmakers to reshore manufacturing to the U.S. and reduce reliance on China and other foreign supply chains.
Stakeholders, analysts weigh in
The Pharmaceutical Research and Manufacturers of America (PhRMA) last month released its 2025 policy agenda making the case that when it comes to trade and competition with other countries, the U.S. is “in a race to maintain its position as the leader in biopharmaceutical innovation and continue to drive economic growth and national security in the 21st century.”
PhRMA noted that the biopharma industry’s manufacturing footprint is in 48 states, with more than 1,500 facilities nationwide, and that the $101 billion in U.S. exports in 2023 makes the sector the “largest exporter among R&D intensive industries.” PhRMA’s 2025 agenda advocates for a U.S. trade policy that boosts American exports and strengthens supply chains.
In an emailed statement last month to Pharma Manufacturing, PhRMA said the organization shares Trump’s goal of ensuring the U.S. maintains its global leadership in biopharma innovation and manufacturing.
“Trade measures should focus on addressing unfair practices abroad and safeguarding our intellectual property to make sure America retains its position as the world leader in bringing safe and effective medicines to market,” said Megan Van Etten, PhRMA’s vice president of public affairs.
At the same time, Van Etten noted that “policymakers have historically excluded medicines from tariffs because they increase costs and reduce access.”
It’s a concern shared by the Association for Accessible Medicines (AAM), a Washington, D.C.-based trade group representing manufacturers and distributors of generic prescription drugs, which urged the Trump administration to not impose tariffs on generic and biosimilar manufactures.
“From the base ingredients to the finished products, U.S. medicines rely on a global supply chain that is already stressed and in need of strengthening.” John Murphy III, AAM’s president and CEO, said in a statement.
Data and analytics firm Global Data last month warned that investors remain concerned about the potential impact of Trump’s tariffs within the biopharma industry and supply chain.
“These tariffs could lead to higher drug prices for patients in the U.S. and drug supply shortages and could force manufacturers to find alternative markets,” according to Global Data, which pointed out that despite trade tensions the Trump administration seeks to incentivize companies to create manufacturing facilities in the U.S.
The problem, Global Data said, is that “tariffs on key trading partners such as Canada, Mexico, and China could erode the cost benefits of outsourcing, forcing U.S. companies to reassess their international expansion strategies.”
Joshua Meltzer, a senior fellow at the Brookings Institution, warned last month that Trump’s 25% tariffs on imports from Canada and Mexico would reduce U.S. economic growth, jobs, and wages, while raising prices.
“These tariffs will also harm the Trump administration’s goal of developing more secure supply chains and competing with China,” according to Meltzer, who contends that a trade war across North America “will only serve to undercut efforts to reshore supply chains away from China.”
