We’re already seeing the major pharmaceutical companies raise a stink about the possibility of tariffs on imported medicines entering the United States. The European Federation of Pharmaceutical Industries and Associations (EFPIA)—which represents large pharmaceutical companies such as Bayer, Novartis, and Novo Nordisk—opposes the measure. They want to caution rising tariffs, which they say could jeopardize Europe’s essential contribution to pharmaceutical production worldwide.
Yet in 2024, the United States imported a staggering $213 billion worth of medicines. This is more than two and a half times the amount it was just ten years ago. A large share of this total—$127 billion—came from the European Union. Until now, the U.S. has relied heavily on a number of key suppliers of finished medicines—including India, Europe, and China. These imports have come without picking up any tariffs. New active pharmaceutical ingredients—key to all drug manufacturing—only recently became subject to some duties.
The new tariffs have thrown the entire pharmaceutical supply chain into a state of uncertainty. This is particularly the case for India, which exports almost one-third of its $13 billion per year in pharma exports to the U.S. As seen above, the U.S. market has been indispensable to Indian drug manufacturers. If tariffs are raised, these American manufacturers will be forced to raise their prices, which would mean higher costs for American consumers’ medical needs.
Indian pharmaceutical stocks took a nosedive after reports of proposed tariffs. Investors worried that increasing expenses would compromise the competitive advantage of Indian pharmaceutical giants in an all-important market.
Historically, U.S. tariffs on finished drugs have been minimal or nonexistent, largely due to a 1995 World Trade Organization (WTO) agreement designed to keep medicines affordable for consumers. Today, Americans pay zero or very low tariffs on Indian pharmaceuticals, but this provision would put a stop to that. Meanwhile, Indians importing American medicines must pay an average tariff of 11%.
The potential tariff’s implications go far deeper than just the Indian market. Global pharmaceutical companies like GSK and Pfizer operate across numerous countries—including Ireland and Germany—suggesting that tariffs could disrupt various segments of their supply chains.
Donald Trump has publicly indicated his intention to implement significant tariffs on pharmaceuticals, stating, “We’re going to be announcing very shortly a major tariff on pharmaceuticals. And when they hear that, they will leave China.”
He further emphasized the severity of these tariffs by stating that they would arrive “at a level that you haven’t really seen before.”
In 2024, pharmaceuticals were the EU’s biggest export category to the U.S., at $127 billion. This statistic underscores the critical importance of maintaining a tariff-free trading environment for both U.S. consumers and international drug manufacturers.
Even as debates over the proposed tariffs have heightened, industry leaders remain on edge. They’re concerned about the downstream effects on pricing models and supply chain logistics. The pharmaceutical industry is watching closely. The U.S. government is now taking steps that could profoundly change the global medicine distribution landscape.