Drug Tariffs Cure Nothing and Are a Tax Increase

President Donald Trump has made no secret of his desire for sweeping tariffs on pharmaceuticals.

Last month, the president threatened tariffs as high as 200% on imported drugs.

The trade deal with the European Union (EU) finalized July 27 includes a 15% levy on medicines imported from the continent.

Drug tariffs of any kind are bad policy.

They are nothing more than a tax increase on every American who relies on medicine to manage or recover from disease.

And they'll make prescription drugs even less affordable.

Consider a recent poll from the Kaiser Family Foundation, which found that over one-quarter of American adults have trouble affording their prescriptions. Roughly three in ten patients have deviated from their prescribed drug regimen because of cost.

Tariffs would make this problem worse. Last year alone, U.S. pharmaceutical imports totaled $213 billion.

Someone has to pay the 15% or 200% tax on that sum.

Drug companies may eat it at first. According to some estimates, the 15% tariffs on EU drug imports could cost the pharmaceutical industry between $13 billion and $19 billion.

But drug companies won't absorb 11-figure tax bills for long.

They'll soon pass them along to insurers, employers, and patients in the form of higher prices.

But higher prices are just one of the ways these tariffs will harm patients.

By distorting the market for drug manufacturing, the policy will introduce uncertainty into the drug supply chain.

Some drug companies and wholesalers could try to import more than they normally would before the tariffs take effect.

That could lead to shortages among other importers in the short term.

In the long term, manufacturers abroad could scale back production, reasoning that higher prices will result in less demand.

Patients may not be able to secure the medicines they need.

Given that last year set a record for the most drug shortages in American history, this isn't an outcome anyone should welcome.

Nevertheless, Trump continues to defend his drug tariff scheme as a tool for bringing more manufacturing to American shores.

"We're going to be announcing very shortly a major tariff on pharmaceuticals," the president said earlier this year.

"And when they hear that, they will leave China. They will leave other places . . . and they're going to be opening up their plants all over the place."

It's true that pharmaceutical companies have shifted more of their manufacturing abroad in recent years.

Bringing more of that work back to the United States is a worthwhile strategic objective.

But tariffs are not the best way to pursue that aim.

They ignore the reasons why drugmakers have moved abroad. The unfortunate truth is that the United States lacks a sufficient supply of labor with the skills necessary to make the cutting-edge pharmaceuticals of today.

The U.S. regulatory and tax environment also discourages companies from setting up shop here. According to research published by the American Action Forum, it can take a decade and some $2 billion to build a new pharmaceutical factory in the United States, what with environmental reviews, licensure requirements, and other permitting and approval processes.

These are the problems the Trump administration should prioritize solving if it wants to revive American drug manufacturing.

Instead, the president and his team are opting for punitive new taxes that could harm the health of millions of Americans.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It" (Encounter 2025). Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.