The biopharma industry has spent much of this year grappling with fast-moving changes related to the Trump administration's trade policies. On Thursday, without warning, came another jolt.
“Starting on October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” President Donald Trump wrote in a Sept. 25 post on Truth Social.
“‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction,’” he continued. “There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started.”
The 100% rate floated in Donald Trump’s new communique on pharmaceutical tariffs may appear steep, but the reality of the situation is likely less severe than it seems, multiple analysts wrote Friday after the president’s latest act of social media diplomacy.
The administration’s messaging on pharmaceutical import tariffs this year has been mixed, to say the least, but many drugmakers—both U.S.-based and abroad—have stepped up investments and committed to new American manufacturing projects all the same.
While many uncertainties remain about Trump's pharmaceutical tariff plans, the industry's spending commitments indicate its willingness to get in line with the agenda and avoid punishing tariffs. That said, it isn't clear whether simply announcing a site will suffice for a tariff exemption. It also isn't known whether operating an existing U.S. site exempts a company.
Despite the uncertainties, the announcement will likely "come as a relief” to many biopharma investors, analysts at Citi Research wrote in a Friday note to clients, pointing to the outpouring of life sciences investment dollars into the U.S. that followed Trump’s reciprocal tariff reveal in early April.
“In our view, this lifts a significant overhang, as political uncertainties have kept investor interest at bay for most of this year,” the Citi team said.
The analysts compiled a list of 14 large cap drugmakers that have made U.S. production commitments this year, chronicling pledges from AbbVie, Amgen, AstraZeneca, Biogen, Bristol Myers Squibb, Eli Lilly, Gilead Sciences, GSK, Johnson & Johnson, Merck & Co., Novartis, Novo Nordisk, Regeneron Pharmaceuticals and Sanofi. Those pledges ranged anywhere from $195 million on the low end to $50 billion.
In the background, several Asian generic and biosimilar firms like Celltrion, Aurobindo and Hikma have also pulled out their checkbooks in separate moves to build out their U.S. manufacturing footprints.
“PhRMA companies continue to announce hundreds of billions in new U.S. investments thanks to President Trump’s pro-growth tax and regulatory policies,” Alex Schriver, SVP of public affairs at the influential industry trade group PhRMA, said in an emailed statement.
Nevertheless, tariffs “risk those plans,” he said, arguing that "every dollar spent on tariffs is a dollar that cannot be investment in American manufacturing or the development of future treatments and cures.”
Drugs have historically been immune to tariffs since taxing them could lead to price hikes and shortages, Schriver pointed out.
Analysts at Jefferies tended to agree with Citi’s take that the new tariff saber rattling is mostly inconsequential, speculating that Trump may be leveraging the tariff issue—and looming developments on his “Most Favored Nation” drug pricing reform plan—to set up an “‘on the paper’” win before midterms “that many not actually have any material effect on Pharma [companies].”
Although many top biopharma companies should be well-positioned to endure Trump’s 100% tariff rate, several key questions remain, analysts at Leerink Partners said Friday.
Those include whether the newly proposed rate is a negotiating tactic related to the administration’s Section 232 investigation into the national security implications of pharmaceutical imports; the nature of the terms as they relate to companies outsourcing through CDMOs; and the likelihood that the tariffs will be durable and not reversed upon legal challenges.
That uncertainty was echoed by KPMG’s U.S. life sciences sector leader Kristin Pothier, who told Fierce Pharma in an emailed statement that Trump’s Truth Social post creates a “fork in the road moment for the pharmaceutical sector as they find themselves with more questions than answers.”
“For example, how big does a manufacturing plant have to be,” she continued. “Does a pilot plant count? These are just some of the myriad of questions leaders are grappling with as they assess what the ripple effects and implications of new tariffs could be across their operations, margin performance and pricing strategy.”
Trump’s messaging also failed to address how the 100% rate might interact with those established under trade deals that the administration has already struck.
For instance, a 15% tariff ceiling on pharmaceuticals and many other products coming into the U.S. from Europe is likely to remain intact, a European Commission (EC) spokesperson told CNN on Friday, noting that the deal—solidified in late August—serves as an “insurance policy that no higher tariffs will emerge for European economic operators.”
The Trump administration recently inked a similar trade agreement—complete with a baseline 15% tariff rate—with Japan. Both deals almost entirely exempt generic drugs.
Generic drugs also appear to be exempt from Trump’s 100% rate threat, given the “branded or patented” language in his post.
The Trump administration has repeatedly kicked the can on pharmaceutical import tariffs this year, with the President suggesting in early August that drug tariffs could be announced “within the next week or so.” It’s now been nearly two months. At the time, Trump threatened that the duties could ultimately climb to 250% after beginning at a lower rate and scaling over time.
The administration has also yet to release the findings of its national security investigation into pharma imports, which could tee up broader tariffs for the industry.