Source Credit : Portfolio Prints
The Donald Trump administration on Thursday imposed new tariffs on branded drugs from pharmaceutical companies that have not reached agreements to lower U.S. drug prices—an anticipated move expected to affect only a limited number of manufacturers.
“We need to make sure that our drug supply is protected, secure and domestic,” a senior administration official said, speaking on condition of anonymity. “That is what we’re doing.”
The administration also revised how tariffs are calculated on imported raw materials made from steel, aluminum, and copper, as well as on finished goods containing those metals.
Under the pharmaceutical policy, patented medications and their active ingredients will face tariffs of up to 100%. However, officials said companies have options to reduce or avoid these levies through compliance measures.
Drugmakers that commit to shifting production to the U.S. will initially face a 20% tariff, rising to 100% over four years. Companies that have finalized or are negotiating pricing agreements with the U.S. Department of Health and Human Services—and are building domestic manufacturing facilities—will be exempt. To qualify, new plants must be operational by January 2029.
Larger pharmaceutical firms will have a 120-day window before the full 100% tariff takes effect, while smaller companies—many of which depend on contract manufacturing—will have 180 days. Officials expect additional firms to announce plans to relocate production during this period.
Tariff rates will vary for countries with broader trade agreements with the U.S. Imports from the European Union, Japan, South Korea, and Switzerland will face a 15% rate, while the United Kingdom will be subject to a 10% tariff, partly reflecting its higher government-set drug prices.
“Those countries… can maintain production because they’ve made broader trade agreements with the U.S.,” the official said.
Genetic therapies, biosimilars, and related inputs are currently exempt from tariffs, though the White House said this will be reviewed in one year.
Certain specialized pharmaceutical products—including animal health treatments and drugs for rare conditions—will also be exempt if they originate from partner countries or meet urgent public health needs.
The policy marks another step in Trump’s assertive trade strategy, following the Supreme Court of the United States decision that struck down his broader 2025 tariffs, which had excluded pharmaceuticals. The new sector-specific measures stem from a U.S. Department of Commerce investigation that found some pharmaceutical imports could pose national security risks.
Since November, more than a dozen major drugmakers—including Eli Lilly, Pfizer, and Novo Nordisk—have agreed to lower prices on certain medicines. These deals are part of the administration’s “most favored nation” policy, which ties U.S. drug prices to lower international benchmarks and grants tariff exemptions for up to three years.
Officials said 13 companies have already signed agreements, with four more in active negotiations. They also noted that the pharmaceutical sector has committed roughly $400 billion toward reshoring manufacturing during Trump’s term.
Prior to these agreements, Trump had repeatedly threatened tariffs on pharmaceutical imports, prompting companies to accelerate U.S. investment plans. This shift comes after years of declining domestic drug manufacturing capacity.
Separately, the administration confirmed that tariffs on raw steel, aluminum, and copper products will remain at 50%, but will now apply to the full declared value of imports rather than just the material component.
Officials said the change is intended to prevent foreign exporters from undervaluing shipments to reduce tariff obligations.
For finished goods containing more than 15% of these metals, a 25% tariff will now apply to the total product value. Previously, the 50% duty applied only to the metal portion.
Products containing less than 15% of these metals will not face tariffs under the revised rules.
While administration officials said the changes are unlikely to significantly raise consumer prices, independent analysts suggest the adjustments could modestly increase effective tariff rates.
The Committee for a Responsible Federal Budget estimates the revised metal tariff policy could generate an additional $70 billion in federal revenue over the next decade.
