US President Donald Trump has announced plans for "major" tariffs on imported pharmaceuticals, a significant shift that could end decades of low-cost global trade in medicines, according to BBC reports which note this change follows Trump's recent introduction of a 10% blanket tariff on other imports. The president made this announcement at a Republican Party fundraiser dinner on Tuesday, stating, "We're going to be announcing very shortly a major tariff on pharmaceuticals. And when they hear that, they will leave China."
The BBC coverage highlights that the US has typically imported massive quantities of finished medicines from India, Europe, and China without buyers paying tariffs, though active pharmaceutical ingredients do face some duties. In 2024, US pharmaceutical imports reached $213 billion, more than 2.5 times the total from a decade earlier, as detailed by the BBC analysis of the situation.
The announcement has triggered sharp falls in pharmaceutical stocks worldwide, with NBC News reporting that shares of major US drugmakers including Gilead Sciences, Pfizer, Merck, and Eli Lilly dropped between 2% and 4% in premarket trading. European healthcare stocks fell 5% to their lowest since October 2022, heading for their biggest one-day drop since March 2020, according to NBC's market analysis. Trump has stated these tariffs will incentivize drug companies to move operations to the US, but analysts and companies have raised concerns about the difficulty in establishing manufacturing facilities in America.
NBC News indicates that Europe and the US have deeply interconnected supply chains for medicines, with EU medical and pharmaceutical product exports to the US totaling approximately 90 billion euros ($97 billion) in 2023, according to Eurostat data cited in their coverage.
The pharmaceutical tariffs represent a major expansion of Trump's trade policies, with Reuters reporting that the president made this announcement while speaking at an event at the National Republican Congressional Committee. Indian pharmaceutical stocks closed nearly 2% lower following the announcement, with top losers including IPCA Laboratories, Glenmark Pharma, and Biocon ending between 4% and 5.5% lower, as Reuters documents the market impact.
India sends about a third of its $13 billion annual pharmaceutical exports to the US, which is a key market for their products. Currently, Americans pay little or no tax on imports of Indian medicines, compared with duties of nearly 11% paid by Indians importing American medicines, a situation the Reuters article shows could dramatically change under Trump's proposed policy. Industry experts warn that tariffs would force drugmakers to raise prices, potentially driving up US medical bills, while most firms say moving production is not economically viable for low-margin generic drugs, according to Reuters' industry analysis.
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