The Trump administration unveiled sweeping tariff penalties Thursday targeting patented pharmaceuticals, escalating its leverage campaign to force lower drug prices and shift manufacturing back to American soil.
The centerpiece: a 100% tariff on branded drugs and their active ingredients, with a 120-day implementation window for large companies and 180 days for smaller firms. The move represents the latest in a series of tariff threats designed to bend corporate behavior toward administration priorities.
Companies willing to negotiate can escape the penalties. Those that commit to building drugs domestically will face a reduced 20% tariff rate. Full exemption is available to manufacturers that both relocate production to the U.S. and strike "most-favored nation" pricing agreements with the White House.
The strategy has already shown results. Thirteen drug makers cut voluntary pricing deals last year when the tariff threat first surfaced. Administration officials signaled Thursday that more companies will likely rush to sign agreements to avoid the new levies, and that domestic manufacturing announcements could follow.
Foreign drugmakers based in Japan, South Korea, Switzerland, and the European Union face lower tariff rates tied to existing trade agreements, assuming they avoid striking new deals with Washington. The tariffs specifically target branded pharmaceuticals; generic drugs and biosimilars will be reassessed after one year.
A senior administration official told reporters the administration expects all major patented drugmakers to establish U.S. manufacturing operations.
Metals Tariffs Retuned
The administration also adjusted tariffs on aluminum, steel, and copper Thursday. These materials remain subject to a 50% duty, but the calculation has shifted. Instead of using production costs declared by foreign exporters, the tariff will now be based on the actual price American importers pay.
The change addresses what officials described as widespread gaming of the system, where foreign exporters artificially deflated their declared costs to minimize tariff exposure.
Products containing these metals face a flat 25% tariff on total product value, with an exception: items where the metal comprises less than 15% of the product's weight are exempt from the metals tariff entirely.
Both pharmaceutical and metals actions stem from investigations led by Commerce Secretary Howard Lutnick under Section 232 of the Trade Expansion Act of 1962, which grants the president broad authority to impose tariffs on national security grounds.
The pharmaceutical industry had avoided tariffs under separate emergency economic powers that the Supreme Court struck down earlier this year, keeping the sector vulnerable to this latest action.
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