US President Donald Trump continues to make tariff headlines, now threatening to impose tariffs of up to 200% on imported medicines.
Speaking at a recent cabinet meeting, Trump claimed the tariffs would target pharmaceutical products manufactured abroad in an effort to incentivize companies to bring drug production back to the US.
He stated that manufacturers would be given a grace period of 12 to 18 months to relocate operations domestically before the full weight of the tariffs takes effect.
“If they have to bring the pharmaceuticals into the country … they’re going to be tariffed at a very, very high rate, like 200 percent. We’ll give them a certain period of time to get their act together,” he said.
At the same meeting, Trump also announced tariffs on semiconductors.
After the Cabinet meeting, Commerce Secretary Howard Lutnick told CNBC that details on pharmaceutical tariffs “will come at the end of the month.”
Trump had initially tabled the idea of pharmaceutical tariffs earlier this year, but only now has he made any official announcement confirming the plan.
The announcement comes shortly after Trump signed the ‘Big Beautiful Bill,’ a $4.5 trillion tax-and-spending package he signed into law on July 4, 2025, which will axe nearly $1 trillion from Medicaid over the next decade while extending tax cuts for big businesses and increasing military spending.
Related: Trump’s $4.5 Trillion ‘Big Beautiful Bill’ Passes, Slashes Medicaid by $1 Trillion
The new proposed tariffs fall under the scope of the Trade Expansion Act’s Section 232, which allows the president to impose trade barriers for national security reasons.
Trump did not provide specifics on which medicines or countries would be affected, leaving pharmaceutical companies and US trade partners scrambling for clarity.
In April, the Trump administration initiated an investigation into the pharmaceutical industry, aiming to justify potential tariffs by framing the country’s heavy dependence on foreign drug manufacturing as a national security risk. The US Commerce Department, which is leading the inquiry, is expected to conclude its investigation by the end of July.
Despite the announcement, the stock market remained largely unfazed. Analysts viewed the statement as more of a political maneuver than an imminent policy shift.
According to reporting by the Financial Times, Emily Field, an analyst at Barclays, said investors were shrugging off the latest pharma tariff threat and dismissing it as “rhetoric.”
“No one is taking it seriously,” she said. “The idea of the Taco trade [Trump always chickens out] still prevails.”
In a note, analysts at Leerink Partners said Trump’s announcement is “positive for the biopharma sector, because tariffs will not be implemented immediately … and it is unclear if the administration will follow through in the future.”
Matt Weston, a pharmaceutical analyst at UBS, cautioned that an 18-month timeline would be far too short to relocate manufacturing to the US, given the lengthy processes involved in obtaining regulatory approvals and constructing advanced production facilities.
“Typically, it takes four to five years to shift commercial-scale manufacturing to a new site,” he explained.
Weston also noted that the companies most likely to be impacted are those importing high-value, finished pharmaceutical products into the US. However, he pointed out that this scenario is relatively uncommon among European drugmakers, as many already conduct at least the final stage of manufacturing within the US.
Biotech exchange-traded funds (ETFs) even rose following the remarks, reflecting investor confidence that the tariffs may either be delayed or significantly softened during implementation.
Ireland, Switzerland, Germany, Singapore and India are the top exporters of pharmaceuticals to the US.
Ireland is currently the largest exporter of pharmaceuticals to the US by dollar value. According to US Census Bureau data analyzed by The Wall Street Journal, in 2024 alone, the US imported approximately $50 billion worth of pharmaceutical products from Ireland, compared to $12 billion from India and $8 billion from China.
During a meeting in March with Micheál Martin, Prime Minister of Ireland, Trump floated the idea of a 200% import tariff on pharmaceuticals, criticizing Ireland for attracting US drugmakers with its low corporate tax rate.
“When the pharmaceutical companies started to go to Ireland, I would have said, that’s okay, if you want to go to Ireland. I think that’s great,” Trump said at the time. “But if you want to sell anything into the United States, I’m going to put a 200% tariff on you so you’re never going to be able to sell anything into the United States.”
According to Barclays analysts, a report from a US industry trade group estimates that imposing a 25% tariff on pharmaceutical imports could raise annual drug costs in the US by nearly $51 billion and increase prices by as much as 12.9%.
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