Problems with Trump’s Plan for Tariffs on Generic Drugs
WASHINGTON, D.C. — President Trump announced a plan to impose a 100 percent tariff on generic medicines starting August 2028. A White House official told POLITICOthat the administration intends to use its authority under Section 232 of the Trade Expansion Act of 1962 to impose the tariffs. This follows a “Section 232” investigation in which the Department of Commerce decided that pharmaceutical imports “threaten to impair” national security. Public Citizen filed comments in the Department of Commerce investigation.
While reducing overreliance on supply from just a few sources is a laudable goal, the administration has not provided any additional details needed to assess the tariff plan. For example, the administration has not clarified whether it is considering a tariff plan that includes finished products, component ingredients, or both; if it plans to exclude certain drugs or ingredients; or if it will assess the risks implemented plans might pose to consumers. However, despite Trump’s rhetoric that tariffs will address security concerns, the reality is that the harms will likely outweigh any supposed benefits.
“This reckless and impetuous move will drive up price, force rationing of key medicines and needlessly create scarcity problems. The sole respite from Trump’s reckless pharma tariff plans has been that they so far do not apply to generics, which are vulnerable to supply disruptions that risk people’s access to medicine. Now, Trump has erased even that modest protection, and set a destructive course that could cause, rather than prevent, scarcity and rationing,” said Peter Maybarduk, Access to Medicines Director at Public Citizen.
3 problems with generics tariffs:
- Risks supply chain shocks, shortages, and treatment rationing. Rather than helping secure supply, pharmaceutical tariffs could themselves limit supply options. Manufacturers facing added cost pressures could discontinue products or cut costs, including in ways that can adversely affect product quality. As a result, there may be fewer suppliers available to meet demand. This can have significant consequences for patients who may experience interruptions in care. Tariffs could also increase costs on consumers, contrasting with the administration’s claims that it is trying to address the drug affordability crisis in America. Additionally, it is not clear whether the administration has appropriately assessed the potential risks to patients from tariffs. Notably, incomplete data severely limit assessment of the drivers of drug shortages and supply chain vulnerabilities, meaning the administration may not have the appropriate information needed to assess the impacts of tariffs on drug supplies.
- Prioritizes supply restrictions over flexible supply from multiple sources.While increased domestic capacity has a role to play for some medicines, it would not be feasible or cost-effective to produce all medicines domestically. Moreover, relying on a single or a few suppliers for a drug or component is inherently risky, whether those suppliers are based in the U.S. or another country. As such, addressing supply chain vulnerabilities requires efforts that support timely, affordable, and quality-assured medicine production from capable facilities worldwide. More appropriate strategies would focus on: improving supply chain visibility and data infrastructure to understand and respond to vulnerabilities; incentivizing reliance on supply from multiple sources; investing in research and regulation to optimize for supply chain resilience and quality; and pursuing domestic and public sector manufacturing for essential products that are particularly vulnerable to shortages.
- Undermines U.S. manufacturing and workers. Trump’s stated aim is to prompt pharmaceutical manufacturers to relocate production to the US. However, tariffs on their own are unlikely to move drugmakers – particularly generic suppliers with thin profit margins – to invest billions relocating to the United States. Public investment and support are needed to incentivize manufacturers and help balance the cost of establishing production in the United States. In fact, Trump’s tariffs could make it harder for existing local manufacturers to sustain their businesses. Taken together with actions that undermine union rights and cut Biden-era investments in manufacturing, it’s clear that the Trump administration is not actually supporting domestic capacity or American workers with chaotic and sweeping tariffs.
Peter Maybarduk, Public Citizen’s Access to Medicines director, is available for further comment on the news. Contact eleach@citizen.org to schedule an interview.