Pharma’s Tariff Reprieve Will Be Temporary as More Levies Loom
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The drug industry won a reprieve from sweeping tariffs announced by President Donald Trump on Wednesday, though it could be short-lived as the White House moves forward with plans for future levies on pharmaceutical imports.
The president is looking into launching a so-called 232 investigation into pharmaceuticals and other sectors, including semiconductors and potentially critical minerals, according to a senior administration official. That action could lead to tariffs under the Trade Expansion Act, as it already has for cars and aluminum.
Trump imposed reciprocal tariffs of at least 10% on all exporters to the US and slapped additional duties on around 60 nations with the largest trade imbalances. Drugs were excluded, according to a fact sheet released by the White House.
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The exemption marks a small victory for the world’s largest drug companies, which rely on a global network of manufacturing sites to supply medicines to the US. The Pharmaceutical Research and Manufacturers of America, the industry’s top lobbying group, has met with administration officials in hopes of sparing drugmakers from the levies, and the chief executive officers of Pfizer Inc. and Eli Lilly & Co. have made trips to Mar-a-Lago to meet with Trump.
The president, who has been sharply critical of the drug industry in the past, has signaled that he intends to impose sector-specific pharmaceutical tariffs in the future.
“We are going to produce the cars and ships, chips, airplanes, minerals and medicines that we need right here in America,” Trump said when announcing the new tariffs. “The pharmaceutical companies are going to come roaring back, they are coming roaring back, they are all coming back to our country because if they don’t they got a big tax to pay. And if they do, I’ll be very happy.”
On a call with investors after the announcement, Evercore analyst Umer Raffat said he is expecting investigations into pharmaceutical tariffs to be announced within the next few weeks.
PhRMA, the lobbying group, said it would continue discussions with Trump on tariffs, highlighting the industry’s push to expand its US footprint.
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