Trump says pharmaceutical tariffs are coming, but stocks rise

Shares of some drugmakers rose on Wednesday after President Donald Trump said he would pause steep tariff rates on dozens of nations, temporarily easing fears in regards to the impact of potential tariffs on pharmaceuticals imported into the U.S. 

Trump on Wednedsay announced he would cut back tariffs on most countries to 10% for 90 days, but would immediately hike tariffs on China to 125%. However the pause doesn’t appear to use to sector-specific tariffs.

Pharmaceutical stocks fell earlier on Wednesday on Trump’s comments a day earlier that doubled down on plans to impose pharmaceutical-specific tariffs.

Shares of most U.S.-based firms turned positive Wednesday after Eli Lilly, AbbVie, Bristol Myers Squibb, Regeneron, Merck, Pfizer, Johnson & Johnson and Amgen all dropped not less than 2% to 4% earlier within the day. Some shares of foreign-based firms, similar to AstraZeneca, Novo Nordisk and Novartis, were also positive, while British drugmaker GSK was still down 5%.

Trump on Tuesday said his administration might be announcing a “major” tariff on pharmaceuticals “very shortly,” despite market fallout from his global levies, in response to several reports. He exempted pharmaceuticals from his sweeping tariffs unveiled last week in a short lived relief for drugmakers. 

The president has said tariffs will incentivize drug firms to maneuver manufacturing operations to the U.S. – an effort that Eli Lilly, Johnson & Johnson and others are already pursuing. It comes because the pharmaceutical industry’s domestic manufacturing has shrunk dramatically in recent a long time, with key parts of the production process moving to China, India and other countries where labor and other costs are cheaper. 

U.S. imports of pharmaceuticals reached almost $213 billion in 2024, greater than two-and-a-half times the overall a decade earlier, in response to the United Nations COMTRADE database on international trade.

Nonetheless, Wall Street analysts and corporations have raised concerns that it can be difficult to reshore production within the country, which might be costly, could take several years and will disrupt the pharmaceutical supply chain and drive up drug costs for patients. Drugmakers depend on a fancy network of producing sites, sometimes in several countries for various steps of the production process. 

“Global supply chains are complex, with Pharma amongst probably the most–it is not so simple as moving where someone screws in little screws to make an iPhone,” BMO Capital Markets analyst Evan Seigerman said in a note on Wednesday. 

He said the tariffs will “likely do little to shift manufacturing” back to the U.S. since firms have already got robust operations within the country. 

Seigerman said he expects most large pharmaceutical firms will likely set a goal of “waiting until the top of Trump’s presidency to think about more everlasting manufacturing decisions.”

A gaggle of House Democrats can also be reportedly calling on the administration to guard medical supply chains from what they called the “devastating consequences” the trade war could inflict on U.S. patients. 

“The provision disruptions of critical medical products will unavoidably hurt U.S. patients, force providers to make inconceivable rationing decisions, and potentially even lead to death as treatments are delayed, or more practical medicines and products are swapped for less effective alternatives,” the lawmakers wrote within the letter, the Hill reported. 

Some firms which have invested billions to spice up U.S. manufacturing and construct goodwill with Trump have pushed back on the tariffs, warning about their potential impact on research and development within the industry and patients. 

“We won’t breach those agreements, so we now have to eat the fee of the tariffs and make trade-offs inside our own firms,” Eli Lilly CEO Dave Ricks told BBC in an interview, just over a month after the corporate announced $27 billion in recent domestic manufacturing. 

“Typically, that might be in reduction of staff or research and development, and I predict R&D will come first. That is a disappointing consequence,” Ricks said.

J&J in March also announced a brand new $55 billion investment in U.S. manufacturing, research and development and technology over the subsequent 4 years. The corporate has not commented on tariffs.