President Donald Trump has threatened tariffs on pharmaceutical imports, with U.S. Commerce Secretary Howard Lutnick confirming that the tariffs will be implemented “in a month or two,” ABC News reported April 13.
“Semiconductors and pharmaceuticals will have a tariff model in order to encourage them to reshore, to be built in America,” Mr. Lutnick said. “We need our medicines, and we need semiconductors and our electronics to be built in America.”
“We can’t be beholden and rely upon foreign countries for fundamental things that we need,” he said.
Here are four things to know:
- President Trump claims pharmaceutical tariffs will cause companies “to leave China,” and set up in the U.S., however experts are skeptical as building compliant pharmaceutical facilities typically takes three to five years due to regulatory, environmental and permitting hurdles, according to a Politico report.
“You don’t move manufacturing overnight,” international trade attorney Justine Fassion told the news outlet. - Johnson & Johnson executives told Bloomberg that the impact of the pharmaceutical tariffs may fall most heavily on low-cost generic drugs. Chief financial officer Joe Wolk said the company believes the majority of affected imports will be generics and not innovative therapies. “In some respects, it could very much be good news.” However, J&J chief executive officer Joaquin Duato added that the tariffs on medications risk disrupting supply chains and driving up costs.
- Major pharmacy companies have begun to expand U.S. manufacturing with Eli Lilly announcing $23 billion in projects, Merck investing $1 billion in North Carolina and Novo Nordisk and J&J announcing multibillion-dollar facilities. However, the buildings are now more expensive due to President Trump’s earlier 25% tariff imposed on steel and aluminum.
- Instead of lowering prices, reshoring manufacturing can do the opposite, according to the Politico report. Europe supplies nearly 700 active pharmaceutical ingredients for the U.S. and ING analysts warn that higher U.S. labor and production costs could increase drug prices as a result.
