With concerns mounting and speculation swirling, the particulars of President Donald Trump’s much-touted “Liberation Day” trade policy finally came to light this week on a gray afternoon in the Rose Garden.
At a White House press event Wednesday, Trump advanced the next stage of his economic plan by unveiling baseline tariffs of 10% on the vast majority of goods imported to the U.S., plus reciprocal tariffs on a slew of countries with the steepest U.S. trade deficits.
Notably, while Trump did allude to tariffs on automobiles, the President neglected to mention the “25% or higher” industry-specific duties on pharmaceutical imports that he threatened again during a Cabinet meeting last week.
Further, the reciprocal tariffs—considered the cornerstone of the plan—exclude “pharmaceuticals,” according to a White House fact sheet issued shortly after Trump’s address.
Pharmaceuticals’ exemption from the reciprocal tariffs, which include duties of 34% on China and 20% on the European Union, offers a brief reprieve for the biopharma industry, which has voiced concerns that trade penalties could drive up production costs, trigger supply chain disruptions and more.
Still, the omission of medicines from Trump’s latest round of country-specific import taxes does not mean pharmaceutical-specific tariffs are off the table. Plus, it’s not entirely clear that the reciprocal tariffs as presented won’t cause some sort of disruption to the biopharma industry.
“The devil is a little bit in the details,” Jeff Stoll, U.S. national strategy life sciences leader at the professional services outfit KPMG, said in a recent interview with Fierce Pharma. If active pharmaceutical ingredients (API)—versus finished drugs—are excluded from the “pharmaceutical” language of the fact sheet, for instance, then many of the industry’s concerns about trade barriers would still hold water.
“If APIs are still tariffed, generic drugs and the ability to produce them at low cost would be impacted,” Stoll explained. “So, the big question is ultimately where do the tariffs start or end. If the tariffs are on the pieces that come together to make drugs, such as API, that will have an impact on costs.”
The baseline 10% tariffs are slated to go into effect shortly after midnight on Saturday, while the reciprocal tariffs are expected to take effect on April 9 at 12:01 a.m. ET, according to the White House fact sheet.
The onshoring dilemma
Much of the motivation behind Trump’s tariffs hinges on the desire to bring manufacturing back to U.S. soil. That said, the use of tariffs to promote domestic manufacturing isn’t so straightforward for those in the pharmaceutical industry, thanks to the “incredibly intertwined” nature of most drugmakers’ supply chains, Stoll said.
“It’s not like you can sole source the full manufacturing of many drugs just to the United States or pick your favorite friendly [country] that we have the lowest tariffs on,” he said. “It’s not that simple.”
Stoll pointed to API supply chains specifically, explaining that there are certain drug ingredients that the U.S. likely wouldn’t want to produce in the first place, given environmental considerations and high cost of labor. It’s also preferable to produce certain APIs in other countries given the availability of needed natural resources in those places, he added.
This creates a dilemma for drugmakers, which will almost certainly face rising manufacturing costs if Trump’s tariffs impact pharmaceutical products, Stoll said. The natural inclination would be for those companies to raise the prices of their products in turn, but various factors—from price negotiations under the Inflation Reduction Act to fear of sociopolitical blowback from unpopular drug price hikes—has the industry caught between a rock and a hard place, he explained.
Broad strokes, AbbVie, AstraZeneca, Eli Lilly, Merck & Co. and Pfizer appear to have the largest current U.S. manufacturing presence with 10 major plants each, according to a Wednesday analyst note from TD Cowen. Further, AbbVie, Bristol Myers Squibb and Lilly are the only companies with more disclosed major U.S. plants than facilities outside the U.S., the T.D. Cowen team said.
Those three companies’ U.S. production bias has set them up to be “relatively well-positioned” against any tariff threats compared to their peers, the analysts added.
Meanwhile, among foreign countries, Ireland has the most FDA-registered drug manufacturing sites at 22, followed by France with 20, Germany with 14, Italy with 13 and Singapore with 12, according to the analyst report. In terms of API, 81% of non-U.S. drug ingredients plants registered with the FDA are in Europe.
Trump’s tariffs could also take a major toll on generic drugmakers, who have already spent much of the recent past in a “huge race to the bottom” in terms of pricing, KPMG’s Stoll said. In that time, many mid-tier copycat drugmakers have been overtaken by the Tevas and Mylans of the world, which would now likely have to pass rising costs onto patients if tariffs come into play.
To do, or not to do
It’s unclear exactly how drugmakers ought to proceed at this point, especially considering the lengthy timeline required to set up new manufacturing facilities. With a new administration destined to take the White House in 2029, likely before any company could erect a U.S. production plant from scratch, the choice to “full-on pivot” to domestic manufacturing will likely depend on whether such a facility would still make business sense five or six years from now, potentially under an administration with completely different trade policies, Stoll said.
“Making decisions right now with any kind of definitive clarity is really challenging,” he admitted. Still, Stoll cautioned against making major reshoring moves solely “as a reaction to policy.”
Nevertheless, many drugmakers have been taking steps to at least assess potential cost increases from tariffs. Companies have suggested they could rebalance their manufacturing networks, explore non-European API sources, pursue expansions in the U.S. and enlist contract manufacturers or other alternative production solutions, the T.D. Cowen team said in its report.
While Trump’s tariffs will almost certainly escalate trade tensions in the near term, a consensus is emerging that at some point, the U.S. and other countries will start sitting down and negotiating for more reasonable conditions.
To help push that process along, Stoll believes the pharmaceutical industry and its lobbying arms, such as PhRMA and BIO, should collectively work out a new tariff proposal for the Trump administration, likely with the support of countries outside the U.S. where drug manufacturing is prevalent.
Aside from the immediate business impact of Trump’s tariffs on the industry, Stoll warned that the move could pose a more existential threat to the U.S.’ status as the global leader in biopharma.
“Our reimbursement system and how we pay for drugs, as much as people may criticize it or not like it—it is the fuel that enables the world to have innovative drugs that save lives,” he said.
“And the balance of appreciation, it doesn’t matter which party you’re in, Republican or Democrat,” he continued. “I would say neither party seems to understand the social economic value of the pharmaceutical industry for the United States and what that means, both at home and on the world stage.”
Meanwhile, other countries—in particular China and South Korea—have been rapidly building up their biopharma reputations in the past decade or so and could eventually snatch the mantle of global biopharma leader if the U.S. continues to focus on restrictive trade policies beyond the current administration.
“I don’t think we’re thinking through the domino effect there,” Stoll said of the situation.
Where things stand
The threat of a trade war under Trump 2.0 has been a growing concern for many industries throughout 2025. Still, the situation has been mired in uncertainty.
Back at the start of February, Trump signed an executive order to impose 10% tariffs—later doubled to 20%—on imports from China, alongside 25% tariffs on products shipped from from Canada or Mexico.
More recently, Trump last week renewed threats of “25% or higher” pharma-specific tariffs “in the very near future” while speaking at a Cabinet meeting.
The threat of duties—both geographic and industry-specific—are already proving unpopular with the biopharma industry. In new results from a BIO survey conducted in February, the trade organization revealed that a staggering 94% of the 42 companies it polled feared tariffs on the European Union would drive up manufacturing costs. Fifty percent of companies who responded to the survey asserted that EU trade penalties would force them to hunt for new research and manufacturing partners, as well.
Several large multinational drugmakers are already engaging lobbyists to push for a staggered rollout of Trump’s threatened 25% tariffs on pharmaceutical imports, Reuters reported earlier this week, citing people close to the matter.
Conversely, multiple pharma majors have already bet big on U.S. manufacturing this year following Trump’s arrival in office.
In late February, Eli Lilly said it would invest $27 billion to build four new production facilities in the U.S., while Johnson & Johnson said in March that it plans to spend $55 billion in the U.S. over the next four years.
Elsewhere, Pfizer’s CEO, Albert Bourla, Ph.D., said early last month that his company’s manufacturing network is already well positioned in the U.S., though the New York drugmaker could bring additional production resources in from overseas if the situation demands.
