Editor’s (re)View: Trump’s tariff roller coaster creates uncertainty for markets
The tariff roller coaster continued this week, as President Donald Trump kept businesses that rely on trade with Canada and Mexico in the grips of confusion and uncertainty in his on-again, off-again trade war. Trump’s 25% tariffs on imports from Canada and Mexico took effect on Tuesday, only to have him suspend the tariffs for automakers on Wednesday and then pause tariffs on some goods from Canada and Mexico on Thursday.
If you’re having a hard time processing it all, you’re not alone. As Thermo Fisher Scientific CEO Marc Casper put it this week, “Sometimes it’s good to put the paper away — which I did this morning — or turn off the phone because there’s a lot of volatility out there.”
The chaotic back-and-forth trade drama on tariffs is a nightmare for businesses — large and small — across many industries. This daily uncertainty in early 2025 has made it difficult for them to forecast the impact on their respective bottom lines this year. At the same time, it has forced companies to come up with contingency plans as part of their business strategies to offset the potential effects of tariffs.
Pfizer CEO Albert Bourla on Monday 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.
“If something happens, we will try to mitigate by transferring from manufacturing sites outside to manufacturing sites here — the things that can be transferred quickly,” Bourla said.
Other forward-looking companies with the resources to make such investments, years ago built manufacturing infrastructure precisely with the threat of tariffs in mind.
Merck KGaA CEO Belén Garijo told analysts Thursday that her company, which provides contract development and manufacturing (CDMO) services, has “localized” its supply chain over the years “in anticipation of potential trade barriers and potential tariffs.”
Similarly, Novo Nordisk CEO Lars Jørgensen told reporters Thursday that he does not worry a lot about tariffs, noting that the Danish drugmaker has a global manufacturing network and “in a world with a lot of tariffs, we can redirect products in different ways so they become more localized and maybe fewer crossing borders.”
Jørgensen pointed to the fact that the U.S. market relies heavily on generic drugs, rather than branded products. That’s not a problem for Novo Nordisk’s brand-name medications, but it is for the manufacturers of generics, which account for about 90% of all prescriptions dispensed in the U.S. — of which about half are produced overseas.
Vulnerable generics, biosimilars supply chain
Tariffs on generic or biosimilar medicines would increase the risk of drug and active pharmaceutical ingredient shortages, contends the Association for Accessible Medicines (AAM).
“Drug shortages have been concentrated in the generic pharmaceutical sector in recent years due to extreme sustainability concerns and the lack of economic incentives to produce low-margin products,” AAM said. “Imposing tariffs on generics and biosimilars would heighten these sustainability concerns and potentially exacerbate supply chain shortages.”
AAM CEO John Murphy III in a statement last month urged the Trump administration “not to impose tariffs on generic and biosimilar manufactures” and to “follow their past practice” during Trump’s first term in office of leaving these drugs alone.
“Other countries have reciprocated the U.S. treatment of pharmaceuticals by imposing no, or very low, tariffs from the United States, with 90% of countries maintaining tariffs of 10% or less on pharmaceutical products,” according to AAM, which noted that the European Union maintains no tariffs on these products.
However, in his Tuesday address to Congress, Trump called out the European Union — and individual countries by name including India — for charging the U.S. “tremendously higher tariffs than we charge them.” On April 2, Trump intends to impose reciprocal tariffs on nations that charge higher import taxes than the U.S. — it’s the same date on which the pause of the 25% tariffs on Canada and Mexico is expected to be lifted.
Still, it is anyone’s guess what Trump’s next move will be, including imposing tariffs on pharmaceuticals — which he has reportedly threatened if drugmakers don’t move production to the U.S. So far, Eli Lilly appears to be the only company taking the bait, announcing last week a $27 billion investment to build four new pharma manufacturing sites in the U.S.
