Trump tariffs create uncertainty for biopharma foreign direct investment: GlobalData
If the U.S. follows through on President Donald Trump’s threatened 25% tariffs on goods from Canada and Mexico, both temporarily paused for 30 days, in addition to the 10% tariff on imports from China, it could negatively impact biopharmaceutical foreign direct investment (FDI), according to data analytics firm Global Data.
FDI is “an investment made by a company or investor in a business or corporation located in another country, typically involving acquiring ownership, establishing operations, or expanding facilities,” as defined by GlobalData. With the looming threat of Trump’s tariffs, biopharma FDI is at risk and could potentially worsen drug shortages, increase prices, and force manufacturers to re-evaluate their market strategies, the firm contends.
According to GlobalData’s FDI database, outbound value from the U.S. in the biopharma and healthcare sector decreased by 53% ($3.4 billion in 2024), while inbound value to the U.S. increased by 837% ($6.6 billion) last year. It’s a trend that could increase if Trump’s tariffs take effect.
“This indicates a decline in U.S. biopharmaceutical companies’ investments in the countries where most of their drug manufacturing and clinical trials are typically conducted,” GlobalData said. “In turn, investors remain concerned about the potential impact of these tariffs within the biopharmaceutical industry and supply chain.”
By comparison, GlobalData’s FDI database shows that there was a 787% rise in Europe’s inbound FDI to the U.S. ($5.4 billion) from 2023 to 2024, while Canada experienced a complete decline in outbound FDI from the U.S., dropping from $1.1 billion in 2023 to zero in 2024.
“Despite trade tensions, the Trump administration aims to incentivize companies to establish manufacturing facilities within the U.S., boosting domestic investment,” according to GlobalData. “However, 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.”
For now, GlobalData concluded that with the growing uncertainty in the trade environment, investors may delay new investments until policies become clearer.
“It remains to be seen how biopharmaceutical companies will react to the implementation of the proposed tariffs, which may lead to the relocation of drug manufacturing and clinical trials back to the U.S. or to other tariff-free countries,” the firm concluded.