On April 1, the Trump administration launched an investigation of whether imports of pharmaceuticals pose a national security risk.
Given the relatively short period for public comments, it appears the answer is a foregone conclusion. Tariffs are expected by mid-May. These duties won’t just be economically wasteful: They’ll pummel the U.S. health care system.
Unlike the “reciprocal” tariffs announced on Apr. 2, moreover, Commerce Secretary Howard Lutnick says these “sectoral” tariffs will not be on the negotiating table in bilateral trade talks. The plan seems to be to make them long-term, including by issuing them under Section 232 of the 1962 Trade Expansion Act, versus under the International Emergency Economic Powers Act, which would leave them more open to a legal challenge.
In addition to pharmaceuticals, Trump has also called for Section 232 investigations of semiconductors and critical minerals. He insists the U.S. is overly dependent on imports of all three and is betting that sectoral tariffs can turn things around.
Like in semiconductors and critical minerals, this won’t happen any time soon in medicines, if at all. And it will be tremendously costly. Perhaps prohibitively so.
Unlike in semiconductors and critical minerals, slapping big tariffs on medicines will directly put the lives of American patients at risk.
Keep in mind that nearly all U.S. imports of medicines have been duty-free since 1994 under the World Trade Organization’s Pharmaceutical Agreement. New tariffs will wreak havoc on pharmaceutical supply chains.
PwC estimates that a 25 percent tariff would burden the economy with $76 billion in added costs. The Yale Budget Lab finds that this same import duty would raise the price of medicines by as much as 10.5 percent.
It gets worse. Generic drugs, which account for 90 percent of prescriptions filled in the U.S., could be pulled from the market. In a letter to U.S. Trade Rep Jamieson Greer and Commerce Secretary Lutnick, 26 House Democrats warned that a generic drugs vendor told them a 25 percent tariff would lead it to stop selling 60 medicines in America.
Patient access to branded medicines will also take a hit. Tariffs will raise legitimate concerns regarding the economic feasibility of continuing to import finished medicines and key inputs, or to undertake manufacturing or other activities in the United States.
Eli Lilly’s CEO explained, for example, that absorbing some of the cost of any tariffs would necessitate cutting research and development. This would hurt innovation, thereby undermining America’s national security in pharmaceuticals.
In short, tariffs will work at cross purposes to the goal of increasing patient access to more affordable medicines. This should give Trump pause. He prioritized this goal in his first term and is clearly just as committed now, having signed an executive order on April 15 calling for lower drug prices.
The national security concern is that foreign countries might cut off exports of drugs to the U.S. This “hold up” problem is explained with China as Exhibit A.
Yet, China accounted for just 6 percent of U.S. pharmaceutical imports in 2023. By value, America produces most medicines domestically and then buys others mainly from Ireland, Germany, Switzerland, Singapore and a long list of allies, not from adversaries.
Imports of drugs from China did surge during COVID. But as a study by the Peterson Institute reports, this reflected short-term capacity limits with respect to products the U.S. had stopped making.
Imports fell again when American companies started churning out more innovative antivirals. None of this was spurred on by tariffs.
And despite the headlines, nearly all active pharmaceutical ingredients in drugs consumed in the U.S. are produced domestically (53 percent) or come from Europe (33 percent). The narrative about China is no truer in the case of active pharmaceutical ingredients than it is with pharmaceuticals more generally.
There’s a COVID-era template to build on in securing pharmaceutical supply chains among allies.
Back in 2020, New Zealand and Singapore negotiated a deal on trade in medicines and medical products. It called for the elimination of tariffs, nontariff barriers and export restrictions among a coalition of the willing, which eventually included Australia, Canada and others.
An agreement along these lines would do far more to enhance U.S. national security than a tariff that fails to distinguish ally from adversary.
What the pharmaceutical tariffs can’t do is boost U.S. competitiveness in relation to the likes of Ireland. If this is what Trump is trying to achieve, he should switch from trade policy to tax policy and follow through on his first-term interest in strengthening intellectual property rights at home and abroad.
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University.
