Tariffing the Pill: Trump’s Big Drug-Tax Bet Could Backfire at the Pharmacy

President Donald Trump has slapped tariffs on just about everything that moves. Now he’s eyeing the medicine cabinet. After decades of mostly duty-free entry, imported pharmaceuticals are squarely in the crosshairs: a new US–EU deal layers on 15% tariffs for some European goods, including drugs, and Trump is threatening duties up to 200% on medicines from elsewhere.

Drugmakers call it “shock and awe.” It’s not hyperbole. As PwC’s Maytee Pereira puts it, the industry could go “from zero to the potentiality of 200%.”

Trump says tariffs will bring manufacturing home and—eventually—lower costs. But the near-term math points the other way:

• Tariffs raise import costs; pharmacies and insurers pass that along to patients through co-pays, cash prices, and premiums. ING healthcare economist Diederik Stadig estimates even a 25% tariff would lift US drug prices 10%–14% once stockpiles run down—hitting lower-income and older Americans hardest.
• The generic market—92% of retail Rx volume—runs on razor-thin margins. Squeeze it, and some manufacturers exit. That’s how you get shortages, not savings.

In other words: tariffs risk punishing the exact segment that keeps everyday medicines cheap.

The White House has floated a 12–18 month delay before tariffs bite, giving companies time to stockpile and rearrange supply chains. Analysts say many already are. Leerink’s David Risinger thinks firms hold 6–18 months of inventory; Jefferies’ David Windley argues the real impact may not show up until 2027–2028.

That’s helpful—briefly. Once inventories thin, the tariff bill arrives at the counter.

Over decades, manufacturers shifted production to China and India (lower costs) and Ireland and Switzerland (tax advantages). Result: a ~$150 billion US trade deficit in medicines last year and deep reliance on foreign inputs. One trade analysis notes 97% of antibiotics, 92% of antivirals, and 83% of top generics contain at least one active ingredient made abroad.

Even if you build a shiny new US plant, you’re still exposed if key ingredients are imported. To be tariff-proof, companies would need end-to-end domestic supply chains—a multi-year, multi-billion-dollar project.

The administration is probing drug imports under Section 232 (national security). There’s a case for targeted protection: the Biden team used tariffs to stop dumped syringes from wiping out US producers. But a blanket drug tariff is different. It risks broad price hikes and fragile-market shocks—remember the India plant pause that helped trigger chemo shortages?

Brookings’ Marta Wosińska is blunt: tariffs might nudge brand-name firms with fat margins, but generics will likely need direct financing (grants, contracts, long-term purchase guarantees) to build stateside. Otherwise, they’ll walk.

Potential winners

• Some US-based brand manufacturers with profits to absorb costs (and leverage to raise prices).
• Domestic equipment, construction, and biotech clusters if reshoring accelerates.
• Selective national security goals if targeted correctly (e.g., critical injectables).

Likely losers

• Patients, via higher out-of-pocket costs and premiums.
• Generic manufacturers serving low-margin therapies; expect exits and shortage risk.
• Hospitals and insurers, forced to manage more substitutions and budget volatility.

If Washington truly wants resilient, affordable, US-made medicines without a price spiral, tariffs alone won’t cut it. A realistic package would combine:

1. Narrow, risk-based tariffs (surgical, not sledgehammer) on a short list of critical drugs and inputs, paired with
2. Multi-year federal purchasing contracts and low-cost financing to de-risk domestic generic plants,
3. Fast-track approvals for redundant suppliers (competition is the best shortage insurance), and
4. Transparency mandates on sourcing and capacity so buyers can spot bottlenecks early.

Layering a 200% wall on everything foreign, by contrast, mostly raises invoices.

Trump’s tariff threat is a big stick aimed at a delicate market. It might speed up reshoring at the top end, but for the drugs Americans use most, the likely near-to-medium-term effects are higher prices and periodic shortages—unless Washington pairs tariffs with real money, real contracts, and a targeted scope.

You can rebuild a drug supply chain in America. You just can’t do it on the cheap—or by tariff alone.

The Associated Press and WV News contributed to this report.