Trump Imposes 100% Drug Tariffs on Unresponsive Companies

President Trump’s New Tariff Policy on Imported Drugs

President Donald Trump has introduced a new 100 percent tariff on imported drugs from companies that have not agreed to lower their retail prices. This move is part of his broader campaign to reshape global trade and promote domestic manufacturing.

According to a senior administration official, makers of patented pharmaceuticals can avoid the import tax by joining the president’s “most favored nation” program to reduce U.S. drug prices or by establishing new factories in the American market. Companies that agree to build new U.S. plants will face a 20 percent tariff during construction, which must be completed before Trump leaves office. The administration aims for “the lion’s share” of patented drugs consumed by Americans to be produced domestically.

“We need to make sure our drug supply is protected, secure and domestic,” the official said.

Tariffs and Trade Agreements

Some imported drugs will face much lower tariffs under trade deals Trump negotiated with five U.S. trading partners. Goods from the European Union, Japan, South Korea, and Switzerland will face 15 percent levies, while drugs from the United Kingdom, which was the first to sign a deal with Trump, will be hit with a 10 percent tariff.

The White House has reached agreements with 13 drugmakers and expects to conclude additional four deals soon. Companies have pledged to invest $400 billion in new U.S. plants, according to the official.

On Thursday, the president signed an executive order formalizing the new tariff regime, designed to incentivize other drugmakers to lower prices. Separately, Trump ordered changes to simplify current tariffs on industrial metals.

Impact on Consumers and Industry

Both actions show that the White House is undeterred by Americans’ concerns over the high cost of living, even as the war in Iran is expected to worsen inflation ahead of November’s midterm elections. The president continues to refine his tariff regime following the Supreme Court ruling that invalidated most of the import taxes he imposed on an emergency basis last year.

The tariffs at issue in Thursday’s announcement were imposed under Section 232 of the Trade Expansion Act of 1962, and are unaffected by the high court’s decision. The administration claims foreign companies bear the brunt of U.S. tariffs, a claim disputed by mainstream economists. A study by Yale University and the University of California at Los Angeles found that roughly 90 percent of tariff costs have been absorbed by U.S. importers.

Changes to Metal Tariffs

The administration has adjusted its 50 percent tariffs on steel, aluminum, and copper to address what it describes as gamesmanship by foreign exporters who underreported the value of their shipments to lower their customs bill. From now on, a 50 percent tariff will be assessed on the “full value” of the imported metals paid by U.S. importers rather than on the exporter’s reported cost.

The administration is also changing how tariffs are applied to “derivative” products that contain some steel, aluminum, or copper. Products containing a minor amount of metal—such as a perfume bottle with a metal cap—will face no tariff. Those containing a significant amount will be hit with a 25 percent levy.

Consumer Concerns and Political Implications

Consumers have much at stake in the administration’s handling of imported drugs. Trump has emphasized lowering drug costs as a political priority, an opinion shared by his advisers who have encouraged Republicans to focus on the issue ahead of November’s elections.

The administration launched its most favored nation initiative last year to reduce U.S. drug prices by linking them to those of other countries with lower costs. Officials pressured some of the world’s largest drug companies to voluntarily lower their prices in exchange for benefits such as tariff exemptions. The White House also launched a new government website, TrumpRx, aimed at helping Americans purchase medications at discounted prices.

Pfizer, the first company to publicly announce drug-price cuts in September, said the terms of its deal with the administration included a three-year grace period when the company’s products would escape tariffs. Trump’s tariff threats were a “powerful tool” in compelling price cuts, according to Pfizer CEO Albert Bourla.

Industry and Public Reaction

Democrats have criticized Trump’s claims as hyperbolic, saying that his deals have not always resulted in the cheapest prices available and called on the White House to instead work on bipartisan drug-price legislation. The pharmaceutical industry has also criticized Trump’s tariff threats.

“Imposing new tariffs on medicines would undermine new U.S. investments because every dollar spent on a tariff is a dollar not available to build in America or discover cures,” PhRMA, the industry’s chief lobbying group, said last year.

About 6 in 10 adults say they are worried about affording prescription drugs for themselves or for their families, according to a poll released by KFF last month—the highest level of worry since KFF began polling on the question in 2018.