President Donald Trump issued an executive order Thursday that threatens to impose tariffs reaching 100% on certain patented medications from pharmaceutical companies that fail to negotiate pricing agreements with his administration over the next several months.
Under the new policy, pharmaceutical companies that agree to “most favored nation” pricing arrangements and actively construct manufacturing facilities in America for patented drugs and their components will face zero tariffs. Companies building U.S. facilities but lacking pricing agreements will encounter 20% tariffs initially, escalating to 100% within four years.
A senior administration official explained during a media briefing that companies have time to negotiate before facing maximum tariffs — 120 days for larger corporations and 180 days for smaller ones. The official, who spoke anonymously ahead of the order’s release, declined to name specific companies or medications at risk but mentioned that the administration has already negotiated 17 pricing agreements with major drugmakers, with 13 contracts finalized.
In his executive order, Trump justified the measures as essential “to address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients.” The announcement coincided with the first anniversary of Trump’s “Liberation Day,” when he implemented broad import taxes on nearly all trading partners, causing significant stock market volatility. The Supreme Court overturned those Liberation Day tariffs in February.
Industry representatives expressed concern about the newly announced tariffs. PhRMA CEO Stephen J. Ubl warned that taxes “on cutting-edge medicines will increase costs and could jeopardize billions in U.S. investments.” He emphasized America’s substantial biopharmaceutical manufacturing presence and noted that imported medicines “overwhelmingly come from reliable U.S. allies.”
Since beginning his second term, Trump has implemented numerous import taxes on trading partners and consistently promised substantial levies on foreign-produced medications. However, the administration has leveraged tariff threats to secure agreements with major corporations including Pfizer, Eli Lilly and Bristol Myers Squibb throughout the past year, obtaining commitments for reduced pricing on new medications.
Several countries have established trade frameworks with the United States to limit pharmaceutical tariffs. The European Union, Japan, Korea and Switzerland will face 15% U.S. tariffs on patented drugs, matching previously established rates for most goods. The United Kingdom will encounter 10% tariffs, which Thursday’s order specified would “then reduce to zero” under future trade agreements. Britain previously announced it secured zero tariff rates for all exported medicines to America for at least three years.
Trump also updated his 50% tariffs on imported steel, aluminum and copper Thursday. Beginning Monday, tariff calculations for these metals will use the “full customs value” that American customers pay when purchasing foreign metal, which administration officials claim will prevent importers from avoiding higher payments.
Products manufactured entirely from steel, aluminum and copper will continue facing 50% tariffs from most countries. The administration is modifying how tariffs apply to derivative metals or finished products containing some of these materials without being entirely composed of them.
For products where metal comprises less than 15% of total weight, such as perfume bottle caps, only country-specific tariffs will apply, officials explained Thursday. Products with higher metal content, like predominantly steel washing machines, will face 25% tariffs on their complete value.
Thursday’s orders demonstrate Trump’s continued use of sectoral duties. The president invoked Section 232 of the 1962 Trade Expansion Act for these levies, the same authority used for import taxes on automobiles, lumber and kitchen cabinets. Experts anticipate additional product-specific import taxes ahead.
This approach follows a Supreme Court ruling that eliminated tariffs Trump imposed using different legislation — the 1977 International Emergency Economic Powers Act — which allowed immediate tariffs on any country at virtually any level.
While the February 20 court decision significantly impacted Trump’s economic strategy, the president retains multiple options for aggressive import taxation. Beyond sectoral levies, Trump implemented a 10% tariff on all imports using separate legal authority hours after the Supreme Court ruling, though this duty expires after 150 days. Approximately two dozen states have already challenged these new tariffs.
Trump maintains his steep import taxes are essential to recover wealth “stolen” from America. He argues they will reduce the nation’s longstanding trade deficit and restore domestic manufacturing. However, Trump has also employed tariffs for personal grievances or responding to political opposition. Disrupting global supply chains has proven expensive for businesses and households already facing rising costs.
