The measures, unveiled on Thursday, include a 100 percent tariff on patented drugs and related inputs, marking one of the most aggressive trade actions targeting the pharmaceutical sector in recent years, News.az reports, citing BBC.
Phased implementation and differentiated rates
According to the administration, the tariffs will take effect in phases, with a 120 day delay for large companies and 180 days for smaller firms.
In addition to the blanket 100 percent tariff, imports from key US allies will face reduced but still significant duties. Pharmaceutical products from the European Union, Japan, South Korea, Switzerland and Liechtenstein will be subject to a 15 percent tariff.
Products from the United Kingdom will face a lower rate under a newly concluded bilateral pharmaceutical agreement, though specific details were not disclosed.
Incentives for domestic production
The policy includes incentives aimed at encouraging companies to shift production to the United States.
Firms that enter into Most Favored Nation pricing agreements with the Department of Health and Human Services, alongside onshoring commitments with the Department of Commerce, will be eligible for a zero percent tariff through January 20, 2029.
Companies that agree only to domestic production commitments without pricing agreements will face a reduced tariff of 20 percent.
Officials say the structure is designed to both lower drug costs and boost domestic manufacturing capacity.
Exemptions for key categories
Generic drugs, biosimilars and their associated ingredients are currently exempt from the tariffs, though the administration said this will be reviewed after one year.
Additional exemptions apply to orphan drugs, animal health products and certain specialised medicines, particularly those sourced from trade partner countries or deemed critical for urgent public health needs.
National security justification
The tariffs follow an investigation by the Department of Commerce, which concluded that imports of patented pharmaceuticals and key ingredients pose a risk to US national security.
Officials argue that reliance on foreign supply chains for critical medicines could leave the country vulnerable during crises.
Industry investment response
The administration said the policy has already prompted significant industry reaction, with approximately 400 billion dollars in new investment commitments from US and foreign pharmaceutical companies.
These investments are expected to be directed toward domestic manufacturing and supply chain expansion during Trump’s current term in office.
Global implications
Analysts say the move could reshape global pharmaceutical trade, potentially increasing costs, disrupting supply chains and prompting retaliatory measures from trading partners.
While supporters argue the policy will strengthen domestic resilience, critics warn it could lead to higher drug prices and reduced access in the short term.
The full impact of the tariffs will depend on how companies respond to the incentives and how international partners adjust to the new trade environment.
