Pharma lobbies Trump as 25% tariff on imports looms

Pharma industry leaders are scheduled to meet with Donald Trump later today to discuss a range of issues affecting the sector – including the US President's recent suggestion that he may impose a "25% or higher" tariff on drug imports.

A Bloomberg report has suggested that among those attending the meeting will be Stephen Ubl, head of the PhRMA trade organisation, who is expected to try to engage the President on a range of topics, including Medicare pricing negotiations and the role of pharmacy benefit managers (PBMs) in the medicine supply chain, as well as tariffs.

Analysts at ING have said that tariffs would be a "bitter pill to swallow for both consumers and producers," as they would drive up their costs, and would also break World Trade Organization (WTO) rules that exempt all pharmaceutical products from this sort of toll.

Trump has previously indicated that he wants to reduce pharma imports – particularly for raw materials like active pharmaceutical ingredients (APIs) – and encourage domestic production so the US is less reliant on supplies from other regions like China, India, and Europe.

The problem is that as a highly regulated industry, with changes to production processes subject to strict rules and regulatory oversight, that transition is likely to require months or even years to achieve. In the meantime, manufacturers could see their cost of production rise, and may pass those increases onto health systems and – ultimately – the patients who use their drugs.

Singling out pharma could also be linked to efforts to restrict the flow of fentanyl and other ingredients used to produce illicit and counterfeit drugs into the US.

Trump hasn't given a timetable for the tariffs – unlike, for example, a threatened 25% rate on automotive imports, which is due to start on 2nd April – and in any event could be a starting point for negotiations aimed at securing some as-yet-unidentified trade concessions.

He has already introduced a 10% tax on all products from China – which has responded with its own measures – and threatened to introduce 25% tariffs on products from Canada and Mexico, which were paused after the two countries made concessions in areas like border security.

He is also imposing a 25% tariff on steel and aluminium, due to come into effect on 12th March, and is looking at a similar move for the semiconductor industry.

ING estimates that around a third of medicines used in the US are imported – roughly $200 billion out of $560 billion consumed in 2024 – with countries like Ireland, Germany, and Switzerland expected to be particularly impacted if Trump follows through on his threat.

There is also the possibility that other trading blocs will introduce reciprocal tariffs on pharma products, which would "further drive up costs and pharmaceutical supply chain disruption," according to ING analyst Diederik Stadig.

Photo by Anastasiia Gudantova on Unsplash