Analysts suggested that the tariffs will have little effect on reshoring manufacturing and will likely decrease patient drug access and increase costs.
President Donald Trump appears to be making good on his threats to the pharma industry, announcing on Tuesday that “major” tariffs are coming, in an attempt to force companies to move their manufacturing operations to the U.S., according to several media reports.
Speaking in front of the National Republican Congressional Committee, Trump said “we’re going to be announcing very shortly a major tariff on pharmaceuticals,” according to reporting from The Guardian. “Once we do that, they’re going to come rushing back into our country because we’re the big market.” Trump has yet to announce the size of these potential pharma tariffs.
In a note to investors on Wednesday morning, analysts at BMO Capital Markets maintained that they remain “strongly opposed to tariffs on any pharmaceuticals.” Tariffs, they argued, “will likely do little to shift manufacturing back to the US,” particularly since there is already a “robust” biomanufacturing and fill-finish ecosystem in the country.
“Given the complexity of the Pharma supply chain, we do not expect the industry to make any major changes,” BMO wrote. Instead, these tariffs will only threaten public health and access to crucial treatments, including generics, small-molecule drugs and complex biologics. Tariffs would also mean steeper costs for pharma companies, which they are likely to reflect on their products’ price tags.
“Targeting pharma like this does nothing to ‘Make America Healthy Again’ or reduce prices,” the BMO analysts wrote.
Tuesday’s announcement of pharma tariffs is not surprising. In February, at a private event with CEOs of some of the largest pharmaceutical companies, Trump singled out pharma and threatened to impose tariffs on their products unless they reshore their manufacturing. Trump’s talk of tariffs has taken a big toll on pharma stocks, wiping billions of dollars of market value from some of the top industry players.
When Trump unveiled his ‘Liberation Day’ tariffs last week—10% baseline levies for all imported goods, plus “reciprocal tariffs,” or additional duties on countries with which the U.S. has large trade deficits—pharma products were conspicuously missing from the decree. A fact sheet at the time said that these reciprocal tariffs would not apply to pharma products.
That exemption gave several industry observers a sense of tense safety. Jefferies at the time told investors that they expected to see “minimal” impact on the pharma industry because of these reciprocal duties.
Still, other analysts remained wary, with Leerink saying that pharma-specific tariffs could come “possibly in the next month or so.” Leerink also warned that in the case of these sector-specific levies, “we see risks from reciprocal actions by ex-US countries.”
