Shock as Trump says 100% pharma tariffs will start on 1 Oct

After all the threats, it seems President Trump's tariffs on pharmaceuticals are coming to fruition, and a lot sooner than expected.

From 1st October, a 100% tariff will be levied on any branded or patented pharmaceutical product imported into the US – unless the manufacturer is building a manufacturing plant in the country.

It goes without saying that the rate is a lot higher than expected, with a 25% figure being bandied around in recent months, and it will be implemented a lot sooner than expected. Trump has previously indicated pharma tariffs would be phased in gradually, so companies have time to build factories and relocate manufacturing.

Details are scant for now, as the announcement – entirely in keeping with the Trump administration's dependence on social media to disseminate major policy changes – emerged in a post on Trump's Truth Social platform in the middle of the night.

There are many questions about the plan, for example, the scope of 'branded or patented' is up for debate. While generics would seem to be exempt at first glance, the line could be blurry when it comes to some branded off-patent medicines.

The President has defined what 'building' means, saying it applies to projects that have broken ground or started construction, with no tariffs applied if that is the case. Whether that applies to all of a company's products, however, or just those that will be made in the facility, will have to wait for a full policy announcement.

At the moment, pharmaceuticals are exempt from the wide-ranging 'reciprocal' tariffs imposed on imported goods by Trump when he started his trade war with other countries in April.

He has been threatening tariffs on medicines imported for use by American citizens for months, and a series of big pharma companies have already announced major manufacturing investments in the US in anticipation of such a move.

That investment may be a relatively simple thing for a large multinational group to accommodate at short notice, but it will be a very different proposition for, say, a mid-sized pharma company in Asia selling branded, speciality medicines into the US market.

The EU should be spared some of the pain, given that its recent trade agreement with the US included a 15% ceiling on pharma tariffs.

However, the UK's deal does not include specific provisions for pharma, which is one of the country's flagship industries.

While Downing Street has said it expects "significantly preferential treatment" given the cordial relations with the President – who has already enjoyed his sought-after state visit to the UK, of course – a 100% top rate leaves a lot of room for significant pain.

For Americans, the consequences could be sharp increases in the price of already-expensive medicines and potentially shortages of some smaller, less profitable brands.

The Budget Lab at Yale, a non-partisan policy research centre, has previously estimated that a 25% pharmaceutical tariff would raise drug prices by 15% on average – around $600 per year per household - according to pharmaphorum's recent Deep Dive into the implications tariffs.