President Trump took a major step towards securing U.S. drug supplies on Thursday by issuing new pharmaceutical tariffs.
The goal of the tariffs is to encourage domestic production. According to a statement released by the White House, President Trump “recognizes that America must manufacture pharmaceutical products in order to be safe, secure, and healthy.”
Within the executive order imposing the new tariffs, President Trump cited a report by the Secretary of Commerce, which found the importation of pharmaceutical drugs and active pharmaceutical ingredients was occurring at “such quantities and under such circumstances as to threaten to impair the national security of the United States.”
The White House stated the tariffs are authorized under Section 232 of the Trade Expansion Act of 1962. The order includes a 100 percent tariff on patented pharmaceutical drugs and ingredients, which will take effect 120 days after the order is issued for large companies and 180 days for smaller companies. The tariff order does not currently apply to generic pharmaceuticals.
The order included exemptions for countries that have entered into trade deals with the U.S., including countries within the European Union, Japan, Korea, Switzerland and Liechtenstein, which will be subjected to only a 15 percent tariff. Additionally, companies may avoid the tariffs altogether by entering into Most Favored Nation Pricing (MFN) agreements with the Department of Health and Human Services (HHS), and anchoring agreements with the Department of Commerce.
The announcement from the White House stressed that, despite being a leading nation in pharmaceutical research and development, the U.S. relies heavily on imports, which could pose a threat to national security if supply chains are disrupted. The statement emphasized the vital nature of domestic drug production in promoting national security and protecting public health.