Trump threatens tariffs on pharmaceuticals to spur US manufacturing

President Trump has escalated his efforts to encourage pharmaceutical companies to shift manufacturing to the United States by threatening to impose tariffs on the industry. He announced plans to introduce a “low” initial tariff by the end of the month, with the intention of raising it significantly after a grace period, giving companies up to a year to relocate their production facilities. This move follows prior threats of import levies on pharmaceuticals of up to 200 per cent.

The president’s remarks are aimed at confronting what has been described as profiteering and price gouging within the pharmaceutical sector. Trump’s plan has already caused notable fluctuations in share prices within the sector, while raising concerns over the possible loss of investment and jobs in Europe, including the United Kingdom. A number of major pharmaceutical firms, such as AstraZeneca, Johnson & Johnson, Roche, and Eli Lilly, have recently announced substantial investments in the US market.

Trade negotiations between the US and the UK have committed the British government to improving the operating environment for pharmaceutical companies. Despite this, analysts have expressed concerns over the practicality of Trump’s proposed timeline. The Trade Expansion Act investigation suggests that foreign imports pose a potential threat to US national security, which forms the foundation for the tariff proposals.

Experts have highlighted the need for a more realistic timeframe. UBS has suggested that typical transitions of manufacturing operations to new sites require four to five years instead of the proposed 12–18 months. However, there is a potential loophole, as Roche’s chief executive recently suggested that products which have begun the ‘tech transfer’ process to US manufacturing locations could be excluded from tariffs, provided adequate evidence of ongoing investment is shown.

Johnson & Johnson’s latest financial update indicates that tariff-related costs for 2025 are now expected to total $200 million, reduced from prior forecasts of $400 million due to a temporary trade truce with China. Similar stockpiling strategies across the industry are likely to shield pharmaceutical companies from significant financial impact in the short term, safeguarding results for the second half of the year.

Analysts from Boston-based Leerink Partners believe that the administration is intent on driving US pharmaceutical facility construction ahead of the November 2026 midterm elections. As a result, the potential for targeted tariffs remains a key risk for the global pharmaceutical industry, with trade policies likely to continue shaping investment decisions in the sector.