- President Donald Trump announced plans for 'major' tariffs on pharmaceutical goods during a Republican dinner, triggering significant drops in global pharmaceutical stocks.
- Trump simultaneously increased tariffs on Chinese goods from 104% to 125% while announcing a 90-day pause on tariffs for 75 non-retaliating countries.
- Pharmaceutical industry representatives are divided on the potential impact, with some opposing the tariffs while others believe they could encourage foreign companies to relocate to the U.S.
At the National Republican Congressional Committee dinner Tuesday night, President Donald Trump said the U.S. will announce a “major” tariff on pharmaceutical goods “very shortly.”
“We’re going to tariff our pharmaceuticals,” he said during his speech. “And once we do that, they’re going to come rushing back into our country because we’re the big market.”
Pharmaceuticals and several other goods, including semiconductors, were initially exempted from Trump’s Liberation Day tariffs on April 2, per the White House.
After Tuesday night’s announcement, global pharmaceutical stocks took a hit. The British-Swedish pharmaceutical company AstraZeneca dropped 5% Wednesday morning, and the Swiss-owned company Novartis dropped 3%. U.S. drugmakers also lost over 3% of their value after the announcement, including Pfizer, Merck and Eli Lilly.
Pharmaceutical companies brace themselves
BMO Capital Markets, which includes the Canadian Bank of Montreal, wrote in a note to investors Wednesday morning that it is “strongly opposed to tariffs on any pharmaceuticals,” arguing that tariffs “will likely do little to shift manufacturing back to the U.S.,” per BioSpace.
“Given the complexity of the Pharma supply chain, we do not expect the industry to make any major changes,” they continued. “Targeting pharma like this does nothing to ‘Make America Healthy Again’ or reduce prices.”
On the other hand, the CEO of the U.S.-based pharmaceutical company Lilly, David Ricks, told the BBC he believes Trump’s tariffs will encourage foreign companies to relocate to American soil. However, he doesn’t believe the tariffs will result in the creation of “hundreds of billions of jobs,” as he believes Trump promised.
Ricks also predicted the tariffs would decrease the money pharmaceutical companies could spend on research and could lead to layoffs.
Trump issues tariff pause for 75 countries, increases tariffs on China
In a Truth Social post Wednesday afternoon, Trump announced he would increase tariffs on goods from China, raising them from 104% to 125% due to “the lack of respect that China has shown to the world’s markets.” These tariffs immediately went into effect.
Part of this “lack of respect” was likely Beijing raising levies against the U.S. from 34% to 84% on Wednesday morning, in retaliation to the U.S.’s original 104%, per The Wall Street Journal.
Trump also announced a 90-day tariff pause for 75 countries that “have not ... retaliated in any way, shape or form against the United States.”
“I have authorized a 90 day PAUSE, and a substantially lowered reciprocal tariff during this period, of 10%, also effective immediately,” Trump wrote.
After this announcement, stock markets soared: the S&P rose 7.8% in afternoon trading, the Dow Jones Industrial Average was up 7.1% and the Nasdaq rose 10.3%, per The Associated Press and The Globe and Mail.