For years, the pharmaceutical industry has leaned heavily on global suppliers to cut costs and keep materials flowing. But with new US tariffs looming, that strategy is starting to look increasingly risky. What once felt efficient and diversified now feels exposed. The industry is taking a hard look at reshoring and nearshoring. It won’t be a simple or swift shift, but the long-term impact on supply chain resilience, patient access and competitive edge will be hard to ignore.
In April 2025, President Trump signalled his intent to impose sweeping tariffs on the sector, a development that ‘could end decades of low-cost global trade in medicines’, according to media reports at the time. Clearly, the US currently has a significant trade deficit in pharmaceutical products – over $115bn according to reports, with Ireland, Switzerland, Singapore, India and Germany among the countries most exposed. The speculation is that the level of tariffs could be similar to the 25% faced by the steel, aluminium and car import sectors and could ‘increase US drug costs by nearly $51bn annually, boosting US prices by as much as 13% if passed on’.
But here’s the catch: due to insurance and pricing structures, most pharma companies won’t be able to pass costs on to consumers – not right away, anyway. That puts generic manufacturers in a bind. Analysts warn we could see reductions in R&D, lay-offs and more aggressive pricing negotiations as profitability takes a hit.
According to analysis published by Reuters, US pharmaceutical companies are expected to absorb the immediate costs of proposed tariffs on drug imports – rather than passing them on to consumers – due to existing insurance structures and pricing constraints. However, analysts warn that these tariffs could significantly impact the profitability of generic drugmakers, potentially leading to cost-cutting measures in research and staffing, and may eventually prompt broader pricing negotiations to address disparities between US and international drug prices.
As of early June, it remains uncertain when tariffs will be announced, what specific products they will target and how extensive their impact will be across the pharmaceutical supply chain. For now, much of the industry remains in scenario-planning mode – stress-testing cost models, mapping vulnerabilities and reassessing sourcing strategies.
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