Trump signs 100% tariff order targeting some patented drugs

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President Donald Trump signed an executive order that could impose up to 100% tariffs on some patented pharmaceuticals from companies that do not reach pricing deals with his administration, according to the Associated Press. The announcement came Thursday, the wire service reported, as the administration laid out conditions under which drugmakers could avoid the highest duty rates.

Under the order, companies that sign a “most favored nation” pricing deal and are actively building facilities in the U.S. to onshore production of patented pharmaceuticals and their ingredients would face a 0% tariff rate, the AP said. For companies that do not have a pricing deal but are building such onshoring projects in the U.S., the administration would impose a 20% tariff that would increase to 100% in four years, the AP reported.

A senior administration official previewed the executive order on a press call and, on condition of anonymity, told reporters that companies still had “months” to negotiate before the 100% tariffs begin. The AP reported that the official said the negotiation window would be 120 days for bigger companies and 180 days for everyone else, and that the official did not identify which companies or drugs might be at risk of higher tariffs while noting the administration had reached 17 pricing deals with major drugmakers, including 13 signed.

In the text of the order, Trump wrote that he deemed the tariff actions necessary “to address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients,” the AP reported. The decision arrived on the first anniversary of Trump’s “Liberation Day,” when he unveiled sweeping new import taxes on nearly every country that sent the stock market reeling, a set of duties the Supreme Court overturned in February, according to the wire.

Industry groups warned the tariff approach could raise costs and affect investment. Stephen J. Ubl, the CEO of pharmaceutical trade group PhRMA, told reporters the tariffs “on cutting-edge medicines will increase costs and could jeopardize billions in U.S. investments,” the AP reported, adding that medicines sourced from other countries “overwhelmingly come from reliable U.S. allies.” Ubl also cited the size of the U.S. footprint in biopharmaceutical manufacturing.

The AP reported that the administration has used tariff threats as leverage to negotiate with major drugmakers, including Pfizer, Eli Lilly and Bristol Myers Squibb, over the last year. The administration has tied the company-specific tariff approach to promises of lower prices for new drugs, according to the wire, while also creating a framework in which some countries would see capped tariff rates for patented pharmaceuticals.

Beyond company-specific rates, the AP said several countries reached trade frameworks with the U.S. to limit drug tariffs. Under those arrangements, the EU, Japan, Korea and Switzerland would see a 15% U.S. tariff on patented pharmaceuticals, while the U.K. would receive 10%, with the order noting the U.K. rate would “then reduce to zero” under future trade agreements. The AP said the U.K. previously told the U.S. it secured a 0% tariff rate for all British medicines exported to the U.S. for at least three years.

Thursday’s announcement also included an update to Trump’s tariff plan for metals. The AP reported that the administration issued new guidance starting Monday on how tariff rates on imported steel, aluminum and copper would be calculated, shifting to the “full customs value” of what U.S. customers pay for imported metal under the latest order.

The AP reported that products fully made of steel, aluminum and copper would remain tariffed at 50% for most countries, but that the administration was changing how tariffs apply to “derivative metals,” or finished goods that contain some of these metals but are not entirely made of them. Under the new approach described by officials to reporters, if metal content makes up less than 15% of the product’s total weight, only country-specific tariffs would apply; if the metal amount is higher, officials said a 25% tariff would apply to the whole value, the AP reported.

The AP said the series of sector-specific tariffs reflected the administration’s reliance on Section 232 of the 1962 Trade Expansion Act, an authority Trump also previously cited for car, lumber and kitchen cabinet tariffs. The wire reported that more product-specific duties could follow, and it noted that a Supreme Court ruling struck down tariffs Trump had imposed using another law, the 1977 International Emergency Economic Powers Act. The AP also reported that Trump imposed a 10% tariff on all imports under a separate legal power hours after the Supreme Court’s ruling, though that duty could last only 150 days and that some two dozen states already challenged the new tariffs.