President Donald Trump has said that tariffs on pharmaceutical imports could eventually reach up to 250 percent, as his administration works to lower prescription prices for Americans.
During an interview with CNBC on Tuesday, the president said he will initially impose a “small tariff on pharmaceuticals,” which will rise to 150 percent “in one year, one and a half years maximum,” before then eventually jumping to 250 percent.
Why It Matters
The United States imports a significant amount of pharmaceuticals each year—over $200 billion in 2024, according to the Observatory of Economic Complexity.
Should Trump follow through on ramping up these duties, the highest he has threatened on the industry to date, experts believe this could result in significant increases to drug prices in the U.S. However, some health policy experts told Newsweek this could also help rebalance the global drug supply chain to better favor American customers.
What To Know
Trump said that the tariffs are intended to encourage pharmaceutical companies to move their operations to the U.S.—”because we want pharmaceuticals made in our country”—and to minimize reliance on Europe.
He had previously threatened to place 200 percent tariffs on pharmaceuticals in July, but said he would give the industry time before this change came into effect.
Trump’s threats of pharmaceutical tariffs have raised concerns among experts that these could lead to increased costs and medication shortages in the U.S. In April, the UNC Center for the Business of Health published a report warning that these effects would be especially significant for generic drugs, which are more likely to be imported and operate on lower profit margins than brand-name medications.
“A 250 percent tariff on pharmaceuticals would have a significant impact on drug prices,” said health economist Jeromie Ballreich.
Ballreich told Newsweek that, for branded pharmaceuticals, higher costs from the tariffs will be “passed on to consumers and most likely will be indirect through higher prescription drug insurance premiums.”
Major pharmaceutical companies across the world saw their shares fall on Wednesday following Trump’s announcement. England-based AstraZeneca was down by 1.1 percent, Indiana-based Eli Lilly by 2.3 percent, and Germany-based Bayer AG by nearly 10 percent as of 11:20 ET.
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The latest threat comes as the industry braces for the outcome of an ongoing probe by the Commerce Department into the national security implications of America’s medicinal imports. The investigation was launched in April by Commerce Secretary Howard Lutnick under Section 232 of the 1962 Trade Expansion Act.
Trump did not provide many specifics, such as whether certain classes of pharmaceuticals would be exempt, beyond stating that these tariffs are separate from the country-specific duties that came into effect last week. However, the announcement appears to contradict the terms of the European Union deal struck in July, which the European Commission president said placed a 15-percent tariff “ceiling” on multiple sectors, including pharmaceuticals.
Experts had already warned that the 15 percent tariff outlined in the EU trade deal could end up costing the pharmaceutical industry billions.
The cost implications could also be seen as conflicting with the administration’s separate attempts to lower the price of prescription drugs.
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In May, Trump signed an executive order directing the Secretary of Commerce and U.S. Trade Representative to “ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States.” It also proposed that the U.S. be given Most-Favored-Nation (MFN) status, which would require drug companies to offer Americans the same lowest price that drugs are sold for in other countries.
Trump followed this up by sending letters to 17 of the world’s largest pharmaceutical companies on July 31, outlining steps they must take within 60 days to lower prescription prices for U.S. customers. These include extending MFN pricing to Medicaid, guaranteeing MFN pricing for new medications and negotiating “harder with foreign freeloading nations.”
The letters also call on the companies to expand direct-to-consumer distribution models to ensure customers “get the same low MFN prices that manufacturers already offer to third-party payers.”
“At face value, these tariffs are contradictory to his efforts to lower domestic prices,” Ballreich told Newsweek.
“However, if the tariffs are used as a threat to get drug companies to comply to his administration’s [executive orders], including the recent letters to pharmaceutical CEOs, then I think we could see some changes to the pharmaceutical market, which will lower domestic drug prices.”
Several drugmakers, including Eli Lilly, AstraZeneca and Johnson & Johnson, have also pledged to expand their U.S. manufacturing presence. Prior to the letters being sent, but amid this pressure from the administration, a number had also announced they would be reducing some U.S. drug prices.
Health policy analyst Mariana Socal warned that beyond potential cost implications, the tariffs could significantly disrupt the drug development pipeline, potentially jeopardizing the release of new medications.
“Aside from the problem of added costs, the uncertainty introduced by tariff policies is detrimental in and of itself to the pharmaceutical market,” she told Newsweek, noting that only around one in 10,000 investigated compounds make it to pharmacy shelves, and only do so after decades of work.
“Any added uncertainty is likely to be detrimental to this industry, including disincentivizing investors from supporting this industry and pharmaceutical manufacturers from continuing to look for cures,” she said.
What People Are Saying
Health economist Jeromie Ballreich told Newsweek: “This tariff could really disrupt the U.S. prescription drug market, especially the Medicare part D market, where the party plans will be on the hook for the higher price prices and result in significant premium increases to offset these higher prices. Given that, I don’t think it’s likely that this massive tariff will occur, but rather is a threat to force companies to find solutions based on the executive orders and his recent letters to pharmaceutical CEOs.”
White House deputy press secretary Kush Desai told Newsweek: “President Trump is committed to safeguarding our national and economic security, and that includes ensuring that Americans are never again left in the lurch as they were during the COVID era when shortages of imported drugs and other lifesaving medical equipment put lives at risk. Nothing should be deemed final, however, until officially announced by President Trump.”
Mariana Socal, an associate professor at the Johns Hopkins Bloomberg School of Public Health, told Newsweek: “It is critical to continue to identify solutions to lower drug prices in America and improve drug affordability for Americans. However, it is unclear how tariffs would advance affordability. On the opposite, tariffs can be understood as a hidden tax.”
“In the short term, the likelihood that added costs from tariffs will be passed through to consumers can be reduced by existing contractual agreements with supply chain participants such as distributors and group purchasing organizations, which can protect buyers from price increases for 1-3 years,” she added. “However, even if the added cost of tariffs would not necessarily be passed-through to patients in the short term, it could raise costs in the long run.”
What Happens Next
On Sunday, Trump said he would be announcing tariffs on the industry “within the next week or so.”
Update 08/07/25, 5:32 a.m. ET: This article was updated with a response from the White House.
