Trump’s 100% Pharma Tariff Threat Gets Diluted by Manufacturing Loopholes
Big Pharma just dodged a bullet disguised as a tariff. Starting Oct. 1, imported brand-name and patented drugs will face a 100% tariff unless manufacturers can prove they are building in the US. The rule sets a “shovels in the ground” standard that spares firms already under construction. With projects already underway across the sector, the biggest players are positioned to avoid the full hit.
- NovartisNVS and SanofiSNY are already putting down roots in the US, while Eli LillyLLY has rolled out $11.5B for two new manufacturing sites.
- Bloomberg Intelligence analysts estimate the new duties could impact ~$220B in US pharma imports while boosting average tariff rates by 3.3 percentage points across the sector.
Saved by the bell: The pharmaceutical industry appears largely insulated from immediate disruption. However, smaller biotech firms without deep pockets for domestic manufacturing could face significant challenges, with industry leaders warning that “every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing.” Still, generic drug imports remain exempt from the tariff structure, protecting a significant portion of America’s medication supply chain. In the end, Jefferies analysts argue the move may leave Big Pharma better off than expected.