Despite the remarkable gains in wealth and living standards that free trade has brought to the U.S. and the world, President Trump is pursuing even more tariffs. One of his latest targets is a potential 250 percent tax on pharmaceutical products, a move that drives up healthcare costs while worsening Americans’ health.
Despite claims that other countries will pay, tariffs are a tax on American consumers. Other countries may lose income, but not because the U.S. collects it as taxes. Instead, it will be because Americans will to varying degrees be deprived of their products. Some may claim that these goods could be made in America, but for many there was a reason they weren’t produced here in the first place. For example, generic drugs are already less profitable than name brands, even before considering high American labor and more expensive regulatory compliance.
Generics are 90 percent of all prescriptions filled in the U.S. because they cost much less than brand-name drugs. But tariffs will change that, putting affordable medicines out of reach and Americans’ health will suffer as a result. Already, one-third of Americans take cost-cutting measures with their prescriptions. One in five skip filling a prescription entirely; nearly a quarter substituted a cheaper over the counter medicine; and one in seven ration their medicine by skipping doses or cutting pills in half. Many people resort to using multiple of these methods. Driving up the cost of medicine will not help people who already struggle to afford it.
Despite rhetoric about the need to reshore pharmaceutical manufacturing, the U.S. pharmaceutical sector is already strong. While the U.S. imported $212 billion in pharmaceutical goods in 2024, 54 percent of active pharmaceutical ingredients used in here are made domestically, with almost another $100 billion of pharmaceuticals for export.
Those exports are of particular interest, given that other nations can also respond with pharmaceutical tariffs of their own. The proposed tariffs risk $100 billion of U.S. pharmaceutical exports, and the jobs that go with them. Many countries have already enacted retaliatory tariffs in response to existing tariffs.
An entirely self-reliant us pharmaceutical sector would cost more, produce less medicine, and leave Americans with fewer treatment options. A better approach is to leverage the U.S.’s comparative advantage in developing and producing innovative new medicines, while relying on a diverse international network to manufacture generic drugs. By spreading generic manufacturing across multiple countries, U.S. supply chains are shielded from risks of relying on a single source such as malicious actions of any foreign governments, natural disasters, human error, and more. For the few critical drugs produced in only one or a handful of facilities, maintaining strategic reserves is a far more cost-effective safeguard then reshoring the entire industry.
Ensuring the security of the U.S. pharmaceutical supply chain is essential. But trying to onshore the whole industry through punitive tariffs will only weaken it. Instead, the administration should focus on securing supply lines while keeping drug prices reasonable by encouraging manufacturers to foster a robust, diversified network of pharmaceutical manufacturers to supply the medicines Americans need.
