The US president revealed plans to bring in strict new sanctions on US drug imports in a post on his Truth Social platform on Thursday.
Donald Trump has announced the introduction of 100% tariffs on imported drugs in a major new development within the pharmaceutical industry. Set to take effect on 1 October, tariffs will be imposed on all branded or patented medicines entering the country, unless the manufacturer builds production plants on American soil.
The US president explained that the sanctions are designed to encourage global drugmakers to shift operations back to the US following decades of offshoring. He added that exemptions will be applied to companies with projects currently under construction, or for those that have broken ground.
Pharma giants including Eli Lilly, Johnson & Johnson, AbbVie and Pfizer have already announced billions of dollars in new US manufacturing commitments. Eli Lilly, for instance, recently unveiled plans for two major plants, one in Houston worth $6.5 billion and another in Virginia costing $5 billion.
Why has Trump targeted drug imports?
Trump has defended the new measure, arguing it is necessary in order to protect national security. He also suggested that reshoring production could help lower drug costs, although health experts have warned that it could lead to higher prices.
However, the Trump administration remains committed to reducing the country’s continued reliance on foreign suppliers for critical medicines. Last year, the US imported nearly $213 billion worth of pharmaceuticals, which is almost triple the figure recorded in 2014.
The heavy reliance on imports has left supply chains vulnerable, particularly during global shortages of essential treatments and rising costs of raw materials. Trump insisted the new tariffs are necessary to bring back jobs and strengthen American manufacturing.
Markets await further details on tariffs
Shortly after Trump announced the tariff plan in a post on his Truth Social platforms, the markets began to digest the news. Asian stocks extended losses on Friday morning, led by pharmaceutical companies.
Meanwhile, European shares opened broadly higher on Friday, recovering from early losses amid uncertainty over the exact how wide-ranging some of the duties might be. It is yet to be confirmed as to whether the new levies would apply on top of existing national tariffs.
Trump’s announcement also included tariffs on heavy trucks, kitchen cabinets and upholstered furniture, all framed as measures to protect American industries from foreign competition. Heavy trucks made outside the US will face a 25% tariff, while cabinets will see a 50% levy and furniture 30%.
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