Trump’s 25% tariff may add $750M in costs to US market for drugs made in Canada
Up to $3 billion in pharmaceuticals currently used in the United States depend on Canadian manufacturing, and if President Donald Trump proceeds with reported plans to impose 25% tariffs on those products, it could add $750 million in costs to the U.S. market and potentially disrupt the drug supply, according to an analysis published in JAMA.
University of Toronto researchers conducted a cross-sectional analysis of pharmaceutical drugs manufactured in Canada and exported to the U.S., using IQVIA and NIH DailyMed data from 2022 to 2023. Of 22,082 drug products sold in the U.S. during that period, 411 (1.9%) were manufactured in Canada, representing $3 billion in sales.
The majority (79%) were generic products, and 21% were brand-name drugs, including 20 under patent protection. Among 3,099 unique drugs, 52 (1.7%) depended on Canada for at least 50% of supply, with 28 having no alternative suppliers.
Additional tariffs have been proposed by the Trump administration to begin on Wednesday and may no longer exempt pharmaceutical imports, the University of Toronto researchers warned, raising concerns about drug availability, affordability, and supply stability.
“The proposed tariffs could affect a wide range of medications, from antibiotics to mental health treatments,” Mina Tadrous, lead author and assistant professor, Leslie Dan Faculty of Pharmacy, University of Toronto, said in a statement. “Straining this supply chain could trigger drug shortages and jeopardize patient care. We know that drugs with only one manufacturer and rapidly shifting supply chains increase the risk of shortages.”
Last week, Trump doubled down on his threat to target the pharmaceutical industry with tariffs meant to bring drug manufacturing back to the U.S. On Wednesday, he is expected to announce his plans for reciprocal tariffs, potentially impacting dozens of countries — including India and the European Union. April 2 is also the day Trump’s one-month pause on 25% tariffs on Canadian and Mexican imports is set to be lifted.
The U.S. has twice imposed trade tariffs on Canadian imports, exempting pharmaceuticals under the US-Mexico-Canada Agreement, according to the University of Toronto researchers. However, new tariffs proposed for April 2 may remove this exemption, potentially affecting drug availability and costs, they argue.
Last month, Trump threatened to impose a 25% across-the-board tariff on pharmaceuticals as early as April 2. What’s unclear is whether Trump’s pharma-specific tariffs would be in lieu of the reciprocal tariffs slated to be announced on Wednesday or in addition to them.