Trump Proposes 100% Tariffs on Pharmaceutical Imports Unless Companies Strike Pricing Deals

President Trump signed an executive order imposing up to 100% tariffs on branded pharmaceutical imports unless drugmakers negotiate pricing agreements with his administration, with larger companies having 120 days and smaller ones 180 days before tariffs take effect. More than a dozen major drugmakers including Eli Lilly, Pfizer and Novo Nordisk have already signed deals to lower drug prices in exchange for three-year tariff exemptions, generating $400 billion in commitments to reshore manufacturing. The policy applies country-specific baseline tariffs of 15% to the EU, Japan, South Korea and Switzerland, and 10% to the UK, while exempting generics and biosimilars. Companies must complete new domestic plants by January 2029 to qualify for exemptions, as the administration justifies the policy based on national security concerns identified by the Commerce Department.

100% Tariff Structure and Exemption Pathways for Pharmaceutical Companies

• ▪The Trump administration will impose a 20% tariff on pharmaceutical companies that plan to onshore production, which would increase to 100% four years from now
• ▪The United Kingdom will face a 10% pharmaceutical tariff under the Trump administration's plan
• ▪Larger pharmaceutical drugmakers have 120 days before the 100% tariff rate goes into effect
• ▪The European Union, Japan, Korea and Switzerland will face a 15% pharmaceutical tariff rate under the Trump administration's plan
• ▪Patented medications and their active ingredients face a 100% tariff under the Trump administration's pharmaceutical plan
• ▪The Supreme Court struck down global tariffs imposed by Trump in 2025, which excluded the pharmaceutical industry

Drug Pricing Deals and Manufacturing Reshoring Commitments

• ▪There are $400 billion in commitments to reshore pharmaceutical manufacturing during Trump's term

Changes to Steel, Aluminum, and Copper Tariff Calculations

• ▪Imported finished products containing more than 15% of steel, aluminum or copper will be subject to a 25% tariff on the total value of the item
• ▪The prior tariff duty on imported finished products containing steel, aluminum or copper was 50% only on the value of the metal in the product
• ▪The tariff duty remains at 50% on raw material made from steel, aluminum and copper, but will be on the full price paid by U.S. importers
• ▪The Committee for a Responsible Federal Budget estimates that the change in steel, aluminum and copper tariff calculations will raise an additional $70 billion in federal revenue over the next 10 years
• ▪Finished products that contain less than 15% of steel, aluminum or copper will not be subject to a tariff

Perspective of Pharmaceutical companies without pricing deals

• ▪Pharmaceutical companies that refuse to negotiate drug pricing deals with Trump's administration will face 100% tariffs on patented medications and active ingredients
• ▪Larger pharmaceutical drugmakers have only 120 days to negotiate pricing agreements before facing 100% tariff rates on their products

Perspective of Trump administration

• ▪The Trump administration secured $400 billion in commitments to reshore pharmaceutical manufacturing through its tariff and pricing deal strategy

Perspective of European Union, Japan, South Korea, and Switzerland

• ▪European Union, Japanese, South Korean and Swiss pharmaceutical exporters must navigate both country-level tariffs and potential company-level 100% tariffs if they don't negotiate pricing deals
• ▪The European Union, Japan, South Korea and Switzerland face 15% pharmaceutical tariffs even before company-specific penalties are applied under Trump's executive order