Pharma manufacturers face tariff uncertainty

Donald Trump’s administration announced that it is opening investigations into pharmaceutical and semiconductor supply chains, which will likely result in tariffs that will hurt suppliers in Europe, India, and Canada.

The move shows that, despite stiff political and market resistance, Trump still believes tariffs will benefit his country in the long term by rebalancing trade and boosting manufacturing jobs.

The pharma announcement caused headaches for Canadian producers of generic drugs and pharma ingredients, who are warning of dangerous disruptions to supply chains if the US administration acts erratically.

Trump said last week that pharma tariffs would bring a manufacturing boom to the United States: “They will leave other places because they have to sell — most of their product is sold here, and they’re going to be opening up their plants all over the place.”

But, as with other of Trump’s tariffs, the move could boost prices for consumers while offering uncertain benefits for US industry. Trump’s unpredictability itself is a major liability. Because of strict permitting controls, pharma facilities take years to build, and Trump’s frequent reversals may convince companies it’s unwise to make long-term investments.