President Donald Trump’s proposed tariffs on imports from China and our North American neighbors are more than political prattle. They’re a real threat to the U.S. pharmaceutical industry, trade groups warn, one likely to result in medication shortages and higher prescription drug costs, with patients footing the bill.
The White House on Feb. 1 announced a 10% tariff on Chinese imports, as well as a 25% tariff on goods from Canada and Mexico, in response to “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl.” Within about 48 hours, Canada and Mexico had been granted monthlong pauses. Still, pharma distributors and medtech manufacturers alike were quick to slam the new administration’s expected impact on industry and individuals.
Exempting medical products from tariffs is one solution, offered the Healthcare Distribution Alliance (HDA), a trade group representing pharmaceutical distributors. The alliance also suggested the president consider long-term investments in and incentives for domestic manufacturing to bolster the nation’s medical supply chain.
“We are concerned that placing tariffs on generic drug products produced outside the U.S. will put additional pressure on an industry that is already experiencing financial distress,” the HDA said in a Feb. 2 statement. “Distributors and generic manufacturers cannot absorb the rising costs of broad tariffs. It is worth noting that distributors operate on low profit margins—0.3%.
“As a result, the U.S. will likely see new and worsened shortages of important medications, and the costs will be passed down to payers and patients, including those in the Medicare and Medicaid programs.”
Prescription drug costs have long been a contentious policy point. The 2024 election cycle was no exception, and it remains a hot-button issue in 2025. Nearly half of U.S. adults (41%) believe the country is headed in the wrong direction owing to Trump’s drug price policies, according to a West Health–Gallup poll released days before the inauguration. Republicans (78%) were more likely than Democrats (4%) and independents (27%) to say Trump’s drug price agenda was moving the country forward.
View this interactive chart on Fortune.com
Tariffs could fuel an increase in drug prices in part because China is the world’s leading producer of active pharmaceutical ingredients, or APIs. The U.S., on the other hand, became the top importer ($168 billion) of pharmaceutical products in 2022, per the Observatory of Economic Complexity. Tariffs will only muddle this dependence, according to the Association for Accessible Medicines (AAM).
“The global supply chain for generic and biosimilar medicines is critically important for U.S. patients. From the base ingredients to the finished products, U.S. medicines rely on a global supply chain that is already stressed and in need of strengthening,” AAM president and CEO John Murphy III said in a Feb. 2 news release. “Tariffs on products from Canada, Mexico, and China could increase already problematic drug shortages.”
Adding, “Americans pay less for generics than almost anywhere in the world,” Murphy highlighted that the previous Trump administration didn’t impose tariffs on generics.
Medical technology companies, too, anticipate fallout from Trump’s tariffs. The imposition will not only cause financial harm but also stymie innovation, according to Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AdvaMed).
“R&D spending would likely be the first and most direct casualty, threatening America’s medtech innovation leadership,” Whitaker said in a Feb. 1 statement. “Increased tariffs may even have the unintended consequence of boosting the competitiveness of medtech industries of other nations.”
Trump does, however, have the support of the American Medical Manufacturers Association (AMMA), which represents producers of personal protective equipment (PPE), particularly as the levies pertain to China.
“China has not changed its ways and continues to engage in anticompetitive and hazardous behavior that harms U.S. PPE and medical supply manufacturers, and threatens our supply chains and national security,” AMMA executive director Eric Axel said in a Feb. 3 statement. “We have long advocated for targeted measures to combat dumped, low-quality products while exploiting trade loopholes and transshipment schemes that undermine fair trade.”
Customs and Border Protection is responsible for collecting tariffs. The American companies importing the goods, though, absorb the costs—and may pass them on to consumers. In 2018, during his first term, Trump called himself a “Tariff Man” and incorrectly implied that the exporting countries “pay for the privilege” of doing business with the U.S.
For more on the pharmaceutical industry:
- Online searches predicted the surge in prescriptions of weight-loss drugs like Wegovy and Zepbound, study says. Here’s what could happen next
- Pharma giant Regeneron is spending $119.5M on the world’s largest, most diverse genetic database using DNA from patient volunteers
- Hims & Hers Super Bowl ad slams pricey pharma industry—and fumbles FDA warnings on compounded GLP-1 drugs
- Mark Cuban once helped his college friend save almost $10,000 on prescriptions after a ‘horrific car accident’
- Hate needles? Lilly’s weight-loss pill could get FDA approval next year, CEO says
