The new tariffs will apply to companies that have not signed investment or price reduction agreements with the White House; companies that have reached agreements will be eligible for exemptions or capped tax rates. The tariff is directly aimed at pharmaceutical companies that have not yet reached agreements with the White House, intending to use high tax rates as leverage to force multinational pharmaceutical companies to relocate their production lines back to the United States.
The Trump administration is expediting the imposition of a 100% tariff on certain imported pharmaceuticals, targeting pharmaceutical companies that have yet to reach an agreement with the White House. The move aims to leverage high tax rates to pressure multinational pharmaceutical firms into relocating their production lines back to the United States.
According to the latest media reports, the relevant tariffs will be officially announced as early as this Thursday. The new tariffs will apply to companies that have not signed investment or price reduction agreements with the White House; companies that have reached agreements will be eligible for exemptions or capped tax rates.
$Pfizer (PFE.US)$、$AstraZeneca (AZN.US)$and$Novo-Nordisk A/S (NVO.US)$Companies have obtained tariff exemptions by committing to increase investments in the U.S. and reduce drug prices. In the agreement reached in Turnberry, Scotland, the EU has locked the upper limit of pharmaceutical tariffs at 15%; the UK has also secured a three-year tariff preference on the condition of increasing NHS spending on drug procurement.
For pharmaceutical companies that have not yet completed negotiations, a 100% tariff will bring significant cost impacts and may accelerate their reassessment of decisions regarding factory construction and production layout in the U.S. This tariff, based on a Section 232 national security investigation, has an independent and solid legal foundation and is unaffected by the Supreme Court's ruling in February this year.
Legal Basis: Section 232 Investigation, Unaffected by Supreme Court Ruling
This pharmaceutical tariff stems from a national security investigation initiated in April 2024 under Section 232 of the 1962 Trade Expansion Act.
This legal framework provides independent authorization for the relevant tariffs, fundamentally different in legal nature from the tariffs previously imposed by Trump under emergency powers.
In February this year, the U.S. Supreme Court ruled that the broad tariffs imposed by Trump under emergency powers were invalid.
However, tariffs based on Section 232 are not bound by this ruling, allowing them to proceed smoothly at the legal level. According to reports, the White House has since launched several new investigations, using different legal authorizations to rebuild the tariff system that was previously overturned.
Exemption Mechanism: Those Who Have Signed Agreements Are Protected, Negotiation Pressure Shifted to Companies Not Yet Involved
Countries and companies that have reached agreements with the White House will receive exemptions, a mechanism that forms the core negotiating leverage of this tariff policy while clearly delineating the boundaries of market segmentation.
At the national level, the EU has capped pharmaceutical tariffs at 15% under the Turnberry Agreement; the UK, on the other hand, secured a three-year tariff concession in exchange for a commitment to increase NHS pharmaceutical spending.
At the corporate level,$Pfizer (PFE.US)$、$AstraZeneca (AZN.US)$and$Novo-Nordisk A/S (NVO.US)$negotiations with the Trump administration have been completed, securing exemptions by committing to increased investments in the U.S. and price reduction pledges.
For pharmaceutical manufacturers yet to engage, accepting a 100% tariff or accelerating negotiations will be the unavoidable dilemma.
Using high tariffs as leverage to drive industrial relocation to the United States
As early as last autumn, Trump publicly stated that branded or patented drug manufacturers without production facilities in the U.S. would face a 100% tariff on their imported products. This week’s announcement formalizes the earlier threat.
The policy aims to create cost pressures through high tariffs, pushing multinational pharmaceutical companies to establish factories in the U.S. or reduce prices in exchange for market access.
Industry giants such as Pfizer and AstraZeneca, who have completed negotiations, provide a ready template for other companies—investment commitments coupled with price reductions are currently the main pathway to securing exemptions.
For manufacturers from major pharmaceutical exporting countries like Ireland, Germany, and India, these tariffs will significantly increase operational uncertainty, placing urgent pressure on related companies to reassess their U.S. export strategies and supply chain arrangements.
While pressuring the pharmaceutical industry, the Trump administration is preparing to make significant adjustments to the steel and aluminum tariff system by imposing a uniform 25% tariff on 'derivative products' containing steel and aluminum, replacing the current complex and cumbersome taxation method.
According to US media reports, the aforementioned new steel and aluminum tariff policy could be announced as early as this week. The new policy will stipulate that all finished products manufactured using imported steel and aluminum will be uniformly subject to a 25% tariff. Under the current policy, companies are required to calculate their tax burden based on the steel and aluminum content of their products, with a maximum applicable tariff rate of 50%.
Analysts believe that this tariff adjustment represents more of a 'technical optimization' of existing trade protection policies rather than a directional shift. The US continues to seek to protect its domestic industries through tariffs but is transitioning toward a framework that is 'more operational and predictable' at the implementation level.
Editor/Melody