With President Donald Trump’s tariffs about to take hold, industry groups are warning that the move could hamstring U.S. pharmaceutical supplies and productivity, and put an extra strain on patients’ wallets, too.
Over the weekend, the Trump Administration imposed 25% tariffs on imports from Canada and Mexico, plus a 10% tariff on Chinese imports. The tariffs are slated to go into effect at 12:01 a.m. Eastern time on Tuesday, The New York Times reports.
Monday, though, the president announced that tariffs on Mexico would be paused for a month.
Aside from the issue of immigration, the tariffs are largely motivated by efforts to halt the flow of precursor chemicals and illicit drugs like fentanyl into the country, according to a White House press release issued Saturday.
Alongside imports from Canada and Mexico—as well as a bevy of other countries—the U.S. relies heavily on China for supplies of active pharmaceutical ingredients (API).
As a result, the move could have a chilling effect on the domestic life sciences industry by putting undue pressure on pharmaceutical supply chains, raising medical costs and potentially driving manufacturers away, according to the Healthcare Distribution Alliance (HDA).
On Sunday, the HDA requested that Trump work out tariff exemptions for pharmaceutical products and allow for “long implementation timelines" for the fees.
"We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress,” the group said in a statement.
“Distributors and generic manufacturers cannot absorb the rising costs of broad tariffs,” HDA continued, adding that Trump’s tariffs will likely prompt “new and worsened” shortages of vital meds, the cost of which would trickle down to patients.
The Association for Accessible Medicines (AAM) adopted a similar tack to HDA, with the organization’s CEO, John Murphy III, citing the inherently global nature of the U.S. biopharmaceutical supply chain in a statement warning against the tariffs’ likely hand in potential drug shortages.
Meanwhile, the president and CEO of the National Association of Manufacturers, Jay Timmons, adopted a more evenhanded approach, conceding in a press release that “manufacturers understand the need to deal with any sort of crisis that involves illicit drugs crossing our border.”
That said, protecting manufacturing gains that have come with the U.S.’ North American partnerships is critical to those wins, Timmons said, noting that one-third of critical U.S. production inputs come from Canada or Mexico.
“A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally,” he warned, adding that the “ripple effects” of Trump’s tariffs would be especially severe for small and medium-sized manufacturers that may struggle more to find alternative suppliers.
“Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk,” Timmons said.
The industry groups weren’t without suggestions on how to improve the situation, with HDA in particular advocating for long-term investments and incentives for domestic production.
AAM, for its part, pointed to the previous Trump administration’s decision not to impose tariffs on generic and biosimilar manufacturers, urging the current administration to “follow their past practice” and work with the industry to create more “constructive policies.”
The United States' unilateral move has already sparked retaliatory tariffs from Canada. If the situation devolves, Mexico or China could follow a similar approach.
Elsewhere, the medtech industry has been lobbying for an exemption to the tariffs, too, with the trade association AdvaMed warning that the trade barrier could siphon away R&D investments, lead to higher patient costs and potentially spur layoffs and supply shortages.
“[M]oving manufacturing from one facility to a different or new facility requires FDA approval, which makes it difficult in the short term to adjust production to the U.S,” AdvaMed’s President and CEO Scott Whitaker said in a statement. “We maintain that the potential supply chain disruption and its downstream effects on patients remain a risk, should tariffs be implemented.”