US tariffs on medicines decoded: Why Washington wants pharma production back

The US plans tariffs of up to 100 per cent on imported medicines to reduce foreign dependence and boost domestic manufacturing, a move that could reshape global pharmaceutical supply chains

The administration of Donald Trump has announced new tariffs of up to 100 per cent on certain imported medicines, part of a broader plan to reduce the United States’ dependence on foreign pharmaceutical supply chains and encourage domestic drug manufacturing.

 

The US government believes it relies too heavily on imported medicines and pharmaceutical ingredients, which could pose a risk during global crises. By raising tariffs on some imports, Washington hopes to push drugmakers to shift production to the United States.

 

Why US investigation flagged dependence on foreign drug supplies

 

The policy follows a national security review that concluded the US depends significantly on foreign sources for medicines and their key ingredients.

 

 

In 2025, the United States Department of Commerce initiated a Section 232 investigation to assess whether imports of pharmaceuticals and active pharmaceutical ingredients (APIs) pose a national security risk to the country. The probe found that the US relies heavily on foreign suppliers -- particularly China and India -- for APIs and many finished drugs.

 

According to government findings, a large share of medicines used in the US is produced overseas. Around 53 per cent of patented drugs consumed in the country are manufactured outside the US, while only about 15 per cent of key drug ingredients — known as active pharmaceutical ingredients (APIs) -- are produced domestically.

 

Many of these medicines are manufactured in countries such as India and across Europe. Such dependence could become risky if global supply chains are disrupted by geopolitical tensions, pandemics or wars.

 

The White House said pharmaceutical imports are arriving “in such quantities and under such circumstances as to threaten to impair the national security of the United States.”

 

The US said that the present quantities and circumstances of imports of pharmaceuticals and pharmaceutical ingredients “threaten to impair the national security and economy”.   

 

Why medicine imports are seen as a national security risk

 

Medicines are considered critical to national security because they are essential for the military, public health systems, and emergency situations.

 

During crises -- such as pandemics or conflicts -- supply disruptions could lead to shortages of life-saving drugs. Heavy reliance on foreign suppliers could increase the risk that the US may face shortages of critical medicines if global trade routes are disrupted.

 

How US tariffs aim to boost domestic drug manufacturing

 

• Tariffs to push local manufacturing

 

Under the new policy, certain imported patented medicines and pharmaceutical ingredients could face tariffs of up to 100 per cent. The measure mainly targets companies that do not manufacture drugs in the US or fail to reach pricing or production agreements with the government.

 

The aim is to make imports more expensive so that companies are encouraged to relocate production to American facilities.

 

• Incentives for companies moving to the US

 

Companies that commit to manufacturing drugs in the US will face lower tariffs initially. Firms with approved plans to move production to the country may pay tariffs of around 20 per cent instead of 100 per cent, according to the White House.

 

These incentives are meant to support the construction of new pharmaceutical factories and strengthen domestic supply chains.

 

• Negotiations with companies, trade partners

 

The administration also plans to negotiate with pharmaceutical companies and partner countries to reshape supply chains. Some trade partners — including the European Union, Japan, and South Korea — may face lower tariff rates under specific agreements. The UK could receive further reductions under future pricing deals.

 

Several drugmakers have already pledged billions of dollars in investments to expand manufacturing capacity in the US to avoid higher tariffs.

 

• Generic medicines exempt for now

 

The tariffs mainly apply to patented medicines. Generic drugs — the cheaper versions of medicines — are currently exempt, partly to prevent shortages and price spikes in essential treatments.

 

• Special exemptions for critical treatments

 

Certain categories of medicines will also be exempt from the tariffs, particularly those considered essential for public health. These may include some cancer treatments, drugs for rare diseases, and advanced therapies such as gene-based medicines.   

 

What happens next as US rolls out pharma tariff plan

 

President Trump backed the probe’s findings on Thursday, declaring: “We must act now to protect national security.”

 

The plan will roll out immediately, with the administration focusing on raising tariffs, encouraging companies to manufacture drugs in the US, and reducing reliance on foreign pharmaceutical supply chains.

 

Experts say the policy could lead to more pharmaceutical manufacturing within the United States, though it may also push up drug prices in the short term.