Trump Slaps 100% Tariffs On Imported Patented Drugs, Sparing Companies That Onshore Or Cut Prices

• Tariffs on drugs imported from countries with which the U.S. has tariff deals, such as the European Union, South Korea, Japan, and UK, will be capped at 15%.
• The White House said that the duties will apply to products made by certain large pharma companies in 120 days while smaller ones will get 60 more days.

President Donald J. Trump on Thursday signed an executive order imposing a 100 percent tariff on imported patented pharmaceuticals and active pharmaceutical ingredients, citing a national-security threat from America’s heavy dependence on foreign supply chains, as the administration seeks to increase manufacturing in the country.

Pharmaceutical ETFs iShares US Pharmaceuticals ETF (IHE) and VanEck Pharmaceutical ETF (PPH) closed 0.75% and 0.45%, respectively, following the announcement.

New Levies

Despite leading the world in pharmaceutical research and development, U.S. produces only 15 percent of the active pharmaceutical ingredients it uses for patented medicines and imports 53 percent of the finished patented products themselves, the White House said.

The new levies apply to patented drugs made in countries with which the U.S. have no tariff deals and by companies that haven’t inked drug pricing deals with the administration. Tariffs on drugs imported from countries with which the U.S. has tariff deals, such as the European Union, South Korea, Japan, and UK, will be capped at 15%.

The White House said that the duties will apply to products made by certain large pharma companies in 120 days while smaller ones will get 60 more days.

How Can Companies Avoid These Levies?

Companies can sharply reduce or avoid the tariff by committing to onshore production or signing drug pricing agreements with the Department of Health and Human Services, Trump said.

Firms that submit approved onshoring plans will initially face only a 20 percent tariff. Those inking pricing agreements with the government and onshoring production will pay no tariffs at all through Jan. 20, 2029, Trump said.

Several companies have already inked drug pricing agreements with the Trump administration, including Merck, Pfizer and Eli Lilly and Company, leaving select big names and many small and mid-sized pharma companies exposed.

On Stocktwits, retail sentiment around IHE and PPH stayed within the ‘neutral’ territory coupled with ‘normal’ message volume. 

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