Focus on Import Pharmaceutical Tariff Rates
Lack of Progress in Negotiations with Major Countries
New Item Pressure Follows Films
Impact on Korean Contract Development Firms
Government: “Contributing to U.S. Supply Chain Stability”
U.S. March Trade Deficit Hits $140.5 Billion
Maximal Increase Before Tariff Implementation
U.S. President Donald Trump’s announced pharmaceutical tariffs are coming into view. After previously showing lenient stances with tariff deferrals and easing car tariffs, President Trump is once again tightening control over his tariff policies.
President Trump, during his signing of an executive order related to promoting pharmaceutical manufacturing at the White House on the 5th local time, responded to questions regarding the determination of tariff rates and announcement timelines saying, “I will disclose them within the next two weeks.” He added that an announcement concerning drug prices would be made next week, emphasizing that the U.S. has been unfairly exploited compared to other countries.
During the event, Trump also signed an executive order instructing the U.S. Food and Drug Administration (FDA) to expedite the approval process for constructing pharmaceutical factories in the U.S. The order also urged the U.S. Environmental Protection Agency (EPA) to accelerate related approval procedures.
The White House stated, “We do not want to import pharmaceuticals from other countries”; instead, “we should be able to produce them ourselves.” CNBC reported that the U.S.’s pharmaceutical production has declined over the past few decades, as wages have comparatively risen, allowing China and European countries to expand their markets. According to the U.S. Pharmacopeia (USP), 88% of the active pharmaceutical ingredients (APIs) used in manufacturing finished drugs in the U.S. are imported. Therefore, if tariffs by the Trump administration become a reality, it could cause disruptions in the pharmaceutical supply chain.
Mark Samuels, CEO of the U.K. pharmaceutical industry association ‘Medicines UK,’ told The Guardian that in an insurance-based healthcare system like the U.S., rising drug prices and the expiration of insurance increase the risk of people becoming unable to afford treatment altogether.
Global pharmaceutical companies such as Roche, Novartis, and Johnson & Johnson have recently announced major investment plans in U.S. production facilities.
The mood in the Korean pharmaceutical and biotech industries is to prepare concrete responses after the specific items and methods of tariff imposition are disclosed. Korean contract development and manufacturing organizations (CDMOs) exporting pharmaceuticals to the U.S. are highly likely to be impacted by the tariffs.
Celltrion previously announced a plan to expand local pharmaceutical production if necessary after Trump mentioned the potential imposition of tariffs. The company stated, “As of the end of January, we have already transferred inventory equivalent to around nine months’ supply of products slated for sale in the U.S. this year,” and added that they would “adapt by potentially expanding local production of finished pharmaceuticals based on tariff trends.”
SK Biopharm has secured a six-month inventory for the U.S. in advance, while simultaneously considering plans to increase local production in the U.S.
The government has also begun preemptive measures. On April 4th, it submitted a government opinion letter to the U.S., stating that the import of Korean pharmaceuticals contributes to stabilizing the U.S. supply chain and enhances patient access. According to the Ministry of Health and Welfare and the Ministry of Trade, Industry and Energy, the letter conveyed that importing Korean pharmaceuticals does not threaten U.S. national security but rather aids supply chain stability and improves patient access, making tariff measures unnecessary. The document also highlighted U.S.-Korea pharmaceutical trade as a symbol of economic and health cooperation and noted that Korean CDMO companies support diversification in production for U.S. pharmaceutical companies.
Meanwhile, regarding Trump’s statement about imposing a 100% tariff on foreign films, the White House clarified that “final decisions have not yet been made on tariffs for foreign films.” The previous day, Trump had written on his social media platform, Truth Social, that he had authorized the Department of Commerce and the U.S. Trade Representative (USTR) to immediately begin procedures to impose a 100% tariff on all movies made abroad and imported into the U.S.
USA Today pointed out that this stance appears to be a step back from Trump’s initial position. Trump also expressed on the same day that he would “meet with industry stakeholders,” indicating a shift toward a more cautious approach.
The U.S.’s March trade balance, announced on the 6th, recorded a deficit of $140.5 billion. This exceeds the expected $137.6 billion deficit and surpassed February’s $123.2 billion. The record-high trade deficit in March is attributed to companies rushing to import goods ahead of the White House’s imminent tariff imposition.