What you need to know  
On Wednesday, President Donald Trump announced a 10% baseline tariff on all imported goods, with higher reciprocal rates for select countries, including a 34% tariff on Chinese goods and a 20% duty on European imports.

Pharmaceuticals are not subject to reciprocal tariffs at this time. An annex of the signed executive order details which drugs and compounds are protected from reciprocal tariffs.

Pharmaceuticals may be subject to tariffs within the next 90 days, however. We are monitoring the Trump administration for further announcements and expect that a pharma-sector announcement could come soon.

Overview 
Baseline tariffs will take effect on April 5, and reciprocal tariffs will go into effect April 9. While pharmaceuticals are not directly impacted by these tariffs, the Trump administration has signaled potentially imposing pharmaceutical-specific tariffs by launching a Section 232 investigation into pharmaceuticals. If levied, potential impacts are outlined below. As the implications of tariffs evolve, we'll continue to share updates as we learn more.

Potential impacts on pharmaceuticals

• Tariffs could raise the price of some imported Active Pharmaceutical Ingredient (API) medicines and finished pharmaceuticals, and could shrink inventories of some API, leading to shortages. China and India are key sources of biopharma manufacturing, particularly raw API materials. China is also a key supplier of APIs that are used in targeted therapies.
• Tariffs are less likely to negatively affect brand manufacturers who have higher profit margins and a diversified API supply chain.
• Generic drug manufacturers could face increased cost pressures, though significant, immediate impacts on consumer pricing are unlikely at this time.
• Over-the-counter medicines like ibuprofen and acetaminophen could become more expensive, as China is a key supplier.
• The Inflation Reduction Act (IRA) restricts drug price increases for Medicare Part B and D, which may help mitigate some cost increases. In addition, the IRA may reduce the relative price advantage that generics currently hold. Any drug pricing increases could strain the federal Medicaid budget.
• If levied, tariffs are not expected to generate immediate, straightforward price increases. However, it’s unclear at this time whether supply chain participants may absorb costs or adjust pricing strategies, or whether tariffs will end up exacerbating drug shortages.
• Longer-term impacts from tariffs remain uncertain, including potential shifts in sourcing and broader market disruptions. It's possible that drug prices, premiums and copays could rise over time.​​​​​ Imposing tariffs on pharmaceuticals could establish a concerning precedent and have broader implications, including potential retaliatory tariffs from other countries.

Additional resources
Explore the resources below to learn more about the upcoming tariffs and their potential impacts.

• Pharma industry dodges tariff blow but still braces for disruption
• As Trump's 'Liberation Day' tariffs seem to spare pharmaceuticals, threat of industry-specific duties and loopholes persists
• Drug and device makers confront Trump tariffs
• Analysis: Tariffs on Canadian drugs will strain US supply
• Will pharmaceutical tariffs achieve their goals?

Questions? 
Please reach out to client communications.