Pharma Tariffs Update: 90 Day Reprieve for Most Except China

On April 2, pharmaceuticals were spared the White House’s new “Liberation Day” tariffs. Just days later — on April 8 — the administration reversed course, announcing up to 10% duties on imported finished drugs and APIs. And now, as of April 9, that 10% levy has been paused for 90 days for more than 75 trading partners — except China.

Markets stretched under the weight of the tariff news, then snapped back on the pause. The NYSE Arca Pharmaceutical Index climbed 3.2% on April 9, recouping most of the prior day’s losses.

AbbVie rallied 2.8%, Bristol‑Myers Squibb added 2.5% and Merck rose 2.1% after initially plunging. The broader S&P 500 leapt more than 6%, driven by relief that supply‑chain uncertainty and margin pressures will be delayed — though investors are wary of what would happen when the pause expires.

At the time of the exemption, analysts warned importers might preemptively raise prices by 3% to 5%, setting the stage for even larger cost impacts once the hold ended.

In 2024, the US pharmaceutical market reached an estimated $639 billion in sales, of which roughly $213 billion — or one‑third — was met by imports.

In 2023, Ireland, for instance, earned over $51 billion from US drug exports, followed by Germany at $20 billion, India at $11 billion and China at $7.8 billion — the latter which now faces 125% tariffs.

In addition, generic medicines account for roughly 90% of US prescriptions.

Pharma tariffs on generics and the APIs could drive up costs for hospitals, pharmacies and insurers — potentially slowing generic substitution rates and squeezing narrow‑margin community pharmacies.

Analysts had estimated that the inclusion of pharma could introduce as much as $45 billion in additional import‑cost risk for US drugmakers this year, driven largely by such as APIs and specialized glassware sourced from China and Europe.

BMO Capital Markets analysts argued that tariffs were unlikely to prompt significant reshoring — given the complexity of pharma supply chains — and may instead translate directly into higher out‑of‑pocket costs for patients.

The administration had also touted that current tariffs are generating roughly $2 billion per day in federal revenue.

Despite the tariff push, Eli Lilly had announced $27 billion in new domestic manufacturing, while Johnson & Johnson outlined a $55 billion investment in US manufacturing, R&D and technology through 2029.

Following the April 8 announcement, market reaction was volatile.

AbbVie, Pfizer, Bristol Myers Squibb and Gilead fell sharply on the S&P 500, while Johnson & Johnson, Merck and Amgen led losses on the Dow. European names Sanofi, Novartis and AstraZeneca slipped about 3% to 4%, and even Novo Nordisk and Teva dipped 1.6% to 2.9%. In India, Gland Pharma dropped 6%, Aurobindo 5% and Dr. Reddy’s 4.2%, pulling the Sensex and Nifty50 into negative territory.

In Brussels, EU associations urged Ursula von der Leyen to take “rapid and radical action” to prevent a manufacturing exodus to the US, warning that carve‑outs under Section 232 won’t safeguard the single market’s competitiveness.

After the 90‑day pause announcement, the S&P 500 leapt more than 6% on April 9.