Trump unveils up to 100% tariffs on patented drugs
Companies in the EU, Japan, Korea and Switzerland face a lower, capped tariff rate under existing trade agreements with the US.
President Donald Trump signed an executive order on Thursday that could impose long-threatened tariffs of up to 100% on certain patented drugs from companies that do not reach agreements with his administration in the coming months.
Companies that have signed a “most favoured nation” pricing deal and are actively building facilities in the US to bring production of patented pharmaceuticals and their ingredients onshore will have a 0% tariff.
For those that do not have a pricing deal but are building such projects in the US, a 20% tariff will apply, rising to 100% within four years.
A senior administration official told reporters on a press call that companies still have months to negotiate before the 100% tariffs take effect — 120 days for larger companies, and 180 days for others.
The official, speaking on condition of anonymity to preview the executive order before it was issued, did not identify any companies or drugs at risk of being hit by the increased tariffs but noted the administration had already reached 17 pricing deals with major drugmakers, 13 of which have signed.
In the order, Trump wrote that he deemed such actions necessary “to address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients.”
It comes on the first anniversary of Trump’s so-called Liberation Day, when the president unveiled sweeping new import taxes on nearly every country in the world, sending the stock market reeling.
Those “Liberation Day” tariffs were among the duties the Supreme Court overturned in February.
Some warned of the consequences of the tariffs announced on Thursday. Stephen J. Ubl, CEO of the pharmaceutical industry trade group PhRMA, said taxes “on cutting-edge medicines will increase costs and could jeopardise billions in US investments."
He pointed to America’s already large footprint in biopharmaceutical manufacturing and noted medicines sourced from other countries “overwhelmingly come from reliable US allies.”
Trump has launched a barrage of new import taxes on America’s trading partners since the start of his second term and has repeatedly pledged that very high tariffs on foreign-made drugs were forthcoming.
But the administration has also used the threat of new levies to strike deals with major companies — like Pfizer, Eli Lilly and Bristol Myers Squibb — over the last year, with promises of lower prices for new drugs.
The EU, Japan, Korea and Switzerland will see a 15% US tariff on patented pharmaceuticals, matching previously agreed rates for most goods, and the UK will get 10% — which Thursday’s order noted would “then reduce to zero” under future trade agreements.
The UK previously said it had secured a 0% tariff rate for all British medicines exported to the US for at least three years.
Trump also unveils update to metal tariffs
In addition, on Thursday, Trump rolled out an update on his 50% tariffs on imported steel, aluminium, and copper.
Starting Monday, tariff rates on those metals will be calculated based on the “full customs value” of what US customers pay when buying foreign metal under the latest order, which administration officials say will prevent importers from other countries from avoiding higher payments.
Products fully made of steel, aluminium and copper will continue to be tariffed at 50% for most countries.
But the administration is also changing how tariffs are calculated for derivative metals — or finished goods that contain some of these metals, but are not made entirely of them.
For a product with metal that amounts to less than 15% of its entire weight (like the cap on a perfume bottle), only country-specific tariffs will now apply, officials told reporters on Thursday.
But for products with more metal, such as a largely steel washing machine, they said a 25% tariff will apply to the whole value.
More sectoral taxes are expected
Thursday’s orders are the latest example of Trump turning to sector-specific duties. The president used Section 232 of the 1962 Trade Expansion Act to impose the levies, the same authority he cited to impose import taxes on cars, lumber and even kitchen cabinets.
And many expect to see more product-specific import taxes in the future.
That's because a ruling from the Supreme Court struck down tariffs Trump imposed using another law — the 1977 International Emergency Economic Powers Act — to immediately slap tariffs on any country, at nearly any level.
While the 20 February court decision marked a significant blow to Trump's economic agenda, the president still has plenty of options to keep taxing imports aggressively.
Beyond sectoral levies, Trump also imposed a 10% tariff on all imports under a separate legal power just hours after the Supreme Court’s ruling, but that duty can only last for 150 days. Some two dozen states have already challenged the new tariffs.
Trump has argued his steep new import taxes are necessary to bring back wealth that was “stolen” from the US. He says they will narrow America’s decades-old trade deficit and bring manufacturing back to the country. But Trump has also turned to tariffs amid personal grudges, or in response to political critics. And disrupting the global supply chain has proven costly for businesses and households that are already strained by rising prices.
Trump restructures broad metals tariffs but keeps 50% rate
The Trump administration said it will maintain 50% tariffs on many imported steel, aluminum and copper products, even as it moves to simplify duties for goods made with negligible amounts of the metals.
A senior administration official cast the changes as necessary to simplify a complicated policy and provide more fairness to businesses grappling with President Donald Trump’s tariff regime. The official spoke on condition of anonymity to provide details before the president formally announced them.
Under the new structure, goods with total steel, aluminum or copper content below 15% will be effectively exempted from the metals tariffs, a White House statement said. Some other derivative goods will be subject to a lower 25% rate if they are deemed to be “substantially made” of one of the metals, according to the statement.
Products made abroad but entirely with American metals will face a lower 10% tariff rate, the White House said. Some “metal-intensive industrial equipment and electrical grid equipment” will be taxed at 15% through 2027, a move intended to bolster the US industrial base.
Despite the changes, 50% tariffs will be maintained on a large number of derivative products — including, for example, imported steel pipe. And the levy will be assessed against the full value of the product, not merely its metal content, according to the official.
Comex copper rose as much as 1.4% right after the announcement before giving back the gain to trade 0.5% lower late afternoon Thursday in the US.
The shift follows months of lobbying by companies that said they were unfairly hit by previous duties targeting metals imports. Though the administration argues the levies are designed to encourage domestic manufacturing, an extension of the tariffs to so-called derivative products meant they were applied even to items containing small metal elements, just a fraction of the overall product’s weight and value.
The revised metal tariffs, which were established under Section 232 of the Trade Expansion Act of 1962, come one year after Trump launched the core of his second-term trade agenda, which imposed sweeping levies on goods from dozens of other countries in a bid to foster more US manufacturing, expand American access to other markets and rebalance global trade flows.
While the US Supreme Court earlier this year struck down Trump’s country-by-country levies because they were imposed using an emergency law, the president has been moving to rebuild that tariff wall using other authorities. The administration on Thursday is also unveiling tariffs on imported drugs, with higher levies for products made by companies that are not manufacturing products in the US or who have not struck deals with the White House to lower costs for American consumers.
Officials on Thursday cited consumer products such as dental floss, which has a small metal piece to cut the floss but otherwise lacks significant steel or aluminum content, as an example of products that would be see relief from the metal tariff changes. Washing machines are also expected to benefit.
The structure could result in higher duties for some imported steel and aluminum goods — with the promise of easier compliance to soften the blow. Previously, the steel and aluminum tariffs were applied to derivatives based on the amount of those metals they contain, making it difficult to quickly calculate the appropriate charges.
Supporters of the revised approach on metals said it would buttress the administration’s efforts to reshore domestic manufacturing.
“This action will help ensure these tariffs function as intended to support domestic production and American workers,” said Jon Toomey, president of the Coalition for a Prosperous America, a group representing US manufacturers.
November midterm elections to determine control of Congress are likely to hinge on voters’ feelings about the state of the US economy. Tariffs and the war in Iran have contributed to rising costs for Americans, posing a risk to Trump’s Republicans.
The senior administration official downplayed the revised tariff scheme’s impact on consumer prices.
Trump last year imposed a 50% levy on foreign steel and aluminum in a measure aimed at Chinese overcapacity. The decision wound up hitting other major trading partners hard, including Canada, the European Union, Mexico and South Korea. Later the administration expanded covered products to include the so-called derivative products that contained the metals.
(By Jennifer A. Dlouhy, Joe Deaux and Catherine Lucey)
Trump to reduce steel, aluminum tariff rates for derivative products
The Trump administration plans to reshape its steel and aluminum tariff regime, keeping a 50% tariff for commodity steel and aluminum imports while reducing duties on derivative products made from the metals to 15% or 25%, depending on the product, two sources familiar with the plans said.
The details could change and will be subject to a tariff proclamation from President Donald Trump, which is expected as early as Thursday.
A White House spokesperson did not immediately respond to Reuters‘ request for comment. The tariff adjustment plan was first reported by the Wall Street Journal.
The sources told Reuters that the change is being made to simplify an overly complicated tariff regime put in place last year when Trump doubled the rate of his Section 232 tariffs on steel and aluminum to 50%.
That increase also added the tariffs to thousands of derivative products made with the metals to encourage domestic production, from tractor parts to stainless steel sinks and gas ranges. But the 50% duty only applied to the steel and aluminum content of the product, creating a compliance headache for importers to calculate that figure.
The latest change will apply the lower tariff on the total value of the imported derivative product, making it easier to comply, the sources said.
Trump’s proclamation is expected to include a revised annex listing products subject to the tariffs and duty rates. The sources said that steelmaking equipment may qualify for the lower 15% rate, as the Trump administration imposed the higher tariff rates last year to encourage more investment in domestic steel production.
Such equipment is often imported from Germany and Italy, such as furnace ladles and rolling-mill machinery, and made from sophisticated heat-resistant alloys.
(By David Lawder and Carlos Méndez; Editing by Chris Reese and Andrea Ricci)
