The US president has said he would introduce tariffs to lower prices on expensive medicines, but the impact remains unclear.
Published April 2, 2026
US President Donald Trump has signed an executive order that could impose long-threatened tariffs of up to 100% on some patented drugs if drug companies do not reach an agreement with the administration in the coming months.
Under Thursday’s executive order, companies that enter into “most-favored-nation” pricing agreements and are actively building facilities in the United States will receive zero percent tariffs.
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Companies that do not have a price agreement but build such projects in the United States would be subject to a 20% tariff, which would increase to 100% after four years.
A senior government official told a news conference that companies still have several months to negotiate before 100% tariffs take effect. Large companies will be given 120 days, and other companies will be given 180 days.
The official, who spoke on condition of anonymity to review the executive order before it is issued, did not specify which companies or medicines are at risk of being affected by the tariff hike.
However, the official noted that the administration has already reached 17 price agreements with major pharmaceutical companies, of which 13 have signed.
In an executive order Thursday, President Trump wrote that he believes the tariffs are necessary “to address the threat of national security violations posed by the importation of pharmaceuticals and pharmaceutical ingredients.”
The order arrives on the one-year anniversary of President Trump’s so-called “Emancipation Day,” when he announced sweeping new import taxes on nearly every country in the world, rattling stock markets. These “Emancipation Day” tariffs were among the mandates that the Supreme Court overturned in February.
Critics, pharmaceutical industry leaders and medical groups warned of the potential impact of new tariffs.
Stephen J. Ubl, CEO of PhRMA, a trade group for pharmaceutical companies, said taxes on cutting-edge drugs “could increase costs and jeopardize billions of dollars of American investment.”
He pointed to America’s already large footprint in biopharmaceutical manufacturing, noting that medicines sourced from other countries “overwhelmingly come from trusted allies of the United States.”
Since the start of his second term, President Trump has launched a barrage of new import taxes on America’s trading partners and repeatedly promised exorbitant taxes on foreign-made drugs.
But the administration also used the threat of new taxes last year to cut deals with big companies like Pfizer, Eli Lilly and Bristol-Myers Squibb, promising to lower prices on new drugs.
Several countries have agreed to trade frameworks with the United States to further cap tariffs on pharmaceuticals sent to the United States, beyond company-specific rates.
The European Union, Japan, South Korea and Switzerland will apply a 15% US tariff on patented medicines, in line with previously agreed rates for most items.
The UK, meanwhile, would get 10%, which Thursday’s order said would be “subsequently reduced to zero” under a future trade deal.
The UK previously announced that it would ensure zero per cent tariffs on all British medicines exported to the US for at least three years.
