Big pharma, meet big tariffs.
White House trade adviser Peter Navarro said Thursday the Trump administration may impose tariffs on pharmaceutical imports under a "Section 232" trade investigation, citing national security risks from U.S. dependence on foreign suppliers.
In a CNBC interview, Navarro gave no timeline for the probe but said President Donald Trump's recent executive order to strengthen supply chains would set minimum prices for U.S. drug ingredient makers through long-term contracts, ensuring steady demand. He added that tariffs would help prevent cheap imports from India and China from flooding the market.
Also Read: Trump Administration Opens Probe Into Foreign Drug Imports, Eyes Tariffs Under National Security Law
Earlier this month, Trump floated the possibility of tariffs on imported pharmaceuticals as high as 250% -- the steepest rate he has proposed -- starting with a "small tariff," rising to 150%, and eventually to 250% within 12 to 18 months. The move is part of a broader push to encourage drug companies to bring manufacturing back to the U.S.
Nearly two in five finished prescription drugs are made in the U.S., but only about 10% of the active pharmaceutical ingredients (APIs) -- the biologically active components of those drugs -- are produced domestically.
During his first term, Trump created the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR) to stockpile APIs, which are cheaper and have longer shelf lives than finished drug products. Navarro said filling the SAPIR would reduce U.S. reliance on foreign suppliers, including adversarial nations, and encourage more domestic production.
The executive order directs the Assistant Secretary for Preparedness and Response (ASPR) to work with scientific agencies and the president's economic and homeland security advisors to compile, within 30 days, a list of roughly 26 medicines considered most critical to national health and security. The ASPR must also report how much existing funding can be used to open the SAPIR repository and secure a six-month supply of APIs for those medicines.
Earlier Thursday, four official and industry sources told Reuters the administration is still weeks away from announcing the results of its pharmaceutical import probe and potential new tariffs, as Trump turns his attention to other priorities.
A BofA Securities analyst said if the Trump administration plans to impose tariffs on the pharmaceutical industry, it would likely do so through a “Section 232 investigation” under the Trade Expansion Act of 1962 to determine whether importing certain goods threatens national security.
The typical timeline for a Section 232 investigation is about a year. If the same timeline applied here, tariffs on drug imports likely wouldn’t take effect until late in the year--at the earliest.
Most recently, AstraZeneca plc (NASDAQ:AZN) announced to invest $50 billion in the United States by 2030.
Howard Lutnick, U.S. Secretary of Commerce, said: “For decades Americans have been reliant on foreign supply of key pharmaceutical products. President Trump and our nation’s new tariff policies are focused on ending this structural weakness.”
Read Next:
- Apple To Reintroduce Blood Oxygen Feature On Select Watches Following Customs Ruling
