President Donald Trump ordered a 100% tariff on brand-name pharmaceuticals produced overseas as his administration escalates efforts to push drug companies to manufacture in the United States.
Trump threatened to impose the tariff last year but has since worked to negotiate deals with drug companies to lower their prices and bring drug production to the U.S.
Multiple companies have agreed to such deals. Drug companies that commit to moving production to the United States will face a 20% tariff while they are transitioning and no tariff if they also agree to lower prices to so-called “most favored nation” levels paid by other countries, according to the order. The full tariff will be levied if drug production isn’t in the U.S. in four years.
The European Union, Japan, South Korea, Switzerland and the United Kingdom are exempt from the tariff due to existing trade deals with the United States.
A senior White House official said the tariff will help ensure the United States is not beholden to other countries for lifesaving drugs. The tariff takes effect on July 31 for some companies and September 29 for others, depending on their size.
“The United States is heavily reliant on imports, threatening to limit United States access to life-saving medications in the event of global supply chain disruption due to geopolitical or economic disruption,” the order Trump signed April 2 states, adding that about 53% of patented drugs distributed in the U.S. are manufactured outside the country.
Steep tariffs could increase drug prices, though, experts say.
Roughly 90% of U.S. drug prescriptions are for generic medications. The 100% tariff applies to brand-name drugs that still have a patent, not generics.
Trump, in enacting the pharmaceutical levy, is using a tariff authority that wasn’t impacted by a Supreme Court ruling striking down his use of emergency powers to enact sweeping tariffs.
The new levy on pharmaceuticals came on the anniversary of Trump launching his aggressive tariff program last year. It has since faced setbacks in court and strong criticism from Democrats and some Republicans worried about higher prices.
The Democratic National Committee said April 2 that Trump is damaging the economy with a “reckless trade war.”
The Trump administration has been undeterred by polling that shows the tariffs are unpopular. The White House celebrated Trump’s trade agenda in an April 2 press release stating it is “making our country wealthy, strong, and respected once again.”
“This is just the beginning of the President’s transformation of global trade… Americans can count on the best being yet to come,” White House spokesman Kush Desai said in a statement.
On April 2, Trump also ordered a change to the tariff on foreign steel, aluminum and copper that the White House official said is intended to prevent steel exporters in other countries from lowering their tariff costs by undervaluing the steel they export to the United States. The president also revised the tariff levied on metals in finished products, eliminating it for products with less than 15% metal and changing how it is calculated for products with more metal content.
Trump has pressured drug companies to lower prices and invest in U.S. production.
The president held a White House event in December to announce that nine companies − Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Gilead, GSK, Merck, Novartis and Sanofi − had agreed to cut prices. The administration rolled out a new website, TrumpRx, in February aimed at helping Americans buy medicines at lower prices.
The White House official said drug companies also have committed to hundreds of billions of dollars in U.S. investments.
This story has been updated to add new information.
Contributing: Ken Alltucker