Is Donald Trump planning a 200% tariff on pharma? Here’s what we know

US President Donald Trump, who has so far exempted but promised tariffs on pharmaceuticals, is mulling to impose duties of 200 per cent or more on drugs made elsewhere, according to a report. The US has, for decades, allowed imported medicine to enter its borders duty free. However, in a recent trade deal with Europe, the US imposed a 15 per cent tariff on certain European goods, including pharmaceuticals.

However, the 200 per cent tariff on pharmaceuticals goes against Trump's promise of making drugs cheaper in the country. Imposing stiff tariffs would do the opposite, as well as disrupt supply chains, drive cheap foreign-made drugs out of the US, and create shortages, the Associated Press report added.

Healthcare economist with the financial services firm ING, Diederik Stadig, told the news agency that a tariff could hurt the consumers the most as they would feel the inflationary effect. It could be a direct effect for those who are paying directly for prescriptions and indirectly could increase insurance premiums. Even a 25 per cent increase in drugs could increase pharmaceutical prices by 10-14 per cent as the stockpile decreases.

Trump has also pressured drugmakers to lower prices in the US. The report added that he sent out letters to several companies telling them to develop a plan to start offering most-favoured nation pricing in the US. He said he would delay tariffs for a year or a year and half, which would allow companies a chance to stockpile medicine and shift manufacturing to the US.

Jeffries analyst David Windley said in a recent research note that for tariffs that don’t kick in until the second half of 2026, the impact may not be felt till 2027 or 2028 due to stockpiling.

Many analysts also believe that Trump would settle for a tariff lower than 200 per cent.

US-made drugs won’t face tariffs, which has prompted many drugmakers to invest in the US. However, building a pharmaceutical factory in the US would not only be expensive but would also take several years. Additionally, that might not protect a drugmaker from Trump’s tariffs if the ingredients are imported and tariffs apply to those.