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The Trump administration is considering imposing 200% tariffs on imported medicines, a move that could significantly reshape the US pharmaceutical market. The new US Tariffs are reshaping global trade, directly affecting pharmaceutical imports and exports.
Analysts believe that the Trump Pharma Policy could redefine how the American drug market is regulated. Advertised as a national security move, analysts warn it could drive up the drug prices, create shortages, and trigger legal battles.
For decades, pharmaceuticals have mostly entered the US duty-free. That could change under Section 232 of the Trade Expansion Act of 1962, which the administration cites to justify reducing reliance on foreign supplies.
A sudden Medicine Price Hike has increased the burden on patients who rely on essential drugs. Officials argue that the COVID-19 pandemic showed weaknesses in the US sourcing of pharmaceuticals, strengthening the case for reshoring production..
Even smaller tariffs could have a significant impact on consumers. ING economist Diederik Stadig estimates that a 25% duty could lift US drug costs by 10 to 14%. Low-income households and elderly patients, who depend heavily on prescriptions, would be most affected.
Rising India Pharma Exports are helping stabilize the supply of affordable medicines worldwide. Over 90% of US prescriptions for generic medicines face the most significant risk. With low margins, many generic makers might exit the market rather than absorb higher costs, reducing affordable options.
India is a significant supplier of generic medicines and active pharmaceutical ingredients (APIs), which are crucial for healthcare in the United States. Roughly 6% of the US drug imports come from India.
The growing US Drug Shortages highlight the need for stronger supply chains and better policy planning. Indian generics are currently exempt from tariffs, as officials recognize the importance of keeping medicines affordable and accessible. Still, policy could change and threaten India's $25 billion pharma export industry.
Rebuilding US pharmaceutical manufacturing will not be quick. Over the decades, production shifted to hubs like India, China, Ireland, and Switzerland, where costs are lower. Establishing new factories in the US would require billions of dollars and years of investment.
Marta Wosinska of the Brookings Institution said while domestic control could strengthen resilience, it would inevitably make drugs more expensive for patients.
Some drugmakers are pledging significant US investments. Roche has announced plans for $50 billion in expansion, while Johnson & Johnson plans to invest $55 billion. However, these initiatives cannot replace imported products immediately.
Meanwhile, legal challenges loom. A federal appeals court has already concluded that only Congress, not the president, can implement a broad tariff. The case could reach the Supreme Court, which only adds to the uncertainty.
Also Read: Appeals Court Rules Against Trump Tariffs, Market Faces Mixed Outlook
In the near term, stockpiles may support the supply, delaying the impact. But if tariffs of even 25 to 50% take hold, US drug costs will rise sharply. The proposal highlights a difficult trade-off: building resilient domestic supply chains or preserving affordable access to life-saving medicines.
