President Trump recently announced 100 percent tariffs on brand-name and patented medicines unless the manufacturer is also actively building a new plant in the United States. The policy will drive up prices for patients, create uncertainty in the market, and invite gamesmanship across the pharmaceutical industry.
Tariffs are not paid by foreign companies. They taxes are collected from American importers and passed on to American patients through higher list prices, premiums, deductibles, and copays. As in other industries, tariffs also create shortages—leaving some patients without needed medicines and diving up costs for those who can still access them.
Worse, tariffs are a regressive tax, hitting poor patients the hardest. Measured by cost—what tariffs are based on—Americans imported $212 billion in pharmaceuticals in 2024, much—if not most—of it brand-name or patented. A 100 percent tariff on even a fraction of those medicines would cost patients billions and make it even harder for the more than one-quarter of Americans who already struggle to afford their prescriptions.
The U.S. pharmaceutical industry is strong and globally competitive. In 2019, more than half of the active pharmaceutical ingredients consumed in America were produced domestically. America is also the third largest exporter of pharmaceuticals, shipping $94 billion worth in 2024. These tariffs could backfire and the industry in two key ways.
First, uncertainty. Markets hate ambiguity. If a company already has a U.S. plant, will it still be subject to tariffs unless it builds a new one? Do the tariffs snap back into effect when construction ends? The vagueness leaves manufacturers guessing whether the policy applies to them and whether they will be penalized for having already invested in the U.S. Instead of spring new manufacturing capacity, the rule could chill expansion by encouraging firms to game timelines and stretch projects to avoid tariffs—delaying access to medicine in the process.
Second, retaliation. Pharmaceutical tariffs violate the WTO Pharma Agreement, which eliminates tariffs on medicines, including U.S. exports. Trading partners could answer with their own duties on American pharmaceuticals, threatening America’s position as the third-largest drug exporter instead of strengthening it, and weakening the very industry the policy claims to bolster.
Instead of tariffs, the best way to help patients is to make America more appealing for medicine production. Streamlined generic approvals would expand the number of suppliers, lower prices and reduce supply chain risks. Allowing full and immediate deductions of investments in plant upgrades encourages private investment into American pharmaceutical manufacturing better than threats. Strategic stockpiles for a short and transparent list of truly crucial medicines can prevent shortages due to supply shocks. Unlike tariffs, these policies would make the U.S. a more appealing place to manufacture pharmaceuticals while lowering patient prices.
A 100 percent tariff on brand-name drugs is a price hike on patients, a gift to companies adept at gaming rules, and a temptation for our trading partners to target U.S. exports. If the goal is resilient supply, there are tools that work faster and better: streamline generic and biosimilar approvals, permanent full expensing for plant upgrades, and stockpile any truly crucial medicines. Threats and ambiguity will not build capacity; they will only push costs higher and jeopardize Americans’ health.
