NEW YORK (AP) 鈥� President signed an executive order Thursday that could slap of up to 100% on some patented drugs from companies that don’t reach deals with his administration in the coming months.
Companies that have signed a 鈥渕ost favored nation鈥� pricing deal and are actively building facilities in the U.S. to onshore production of patented pharmaceuticals and their ingredients will have a 0% tariff. For those that don鈥檛 have a pricing deal but are building such projects in the U.S., a 20% tariff will apply but will increase to 100% in four years.
A senior administration official told reporters on a press call that companies still have months to negotiate before the 100% tariffs kick in 鈥� 120 days for bigger companies, and 180 days for everyone else. The official, speaking on condition of anonymity to preview the executive order before it was issued, did not identify any companies or drugs that were in jeopardy of getting hit with 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 鈥渢o address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients.鈥� It arrived on the first anniversary of Trump鈥檚 so-called , when the president unveiled sweeping new import taxes on nearly every country in the world that sent the stock market reeling. Those 鈥淟iberation Day鈥� tariffs were the Supreme Court overturned in February.
Some warned of consequences of the coming tariffs announced Thursday. Stephen J. Ubl, CEO of pharmaceutical company trade group PhRMA, said taxes 鈥渙n cutting-edge medicines will increase costs and could jeopardize billions in U.S. investments.” He pointed to America’s already large footprint in biopharmaceutical manufacturing and noted medicines sourced from other countries 鈥渙verwhelmingly come from reliable U.S. allies.鈥�
Trump has launched a barrage of new import taxes on America鈥檚 trading partners since the start of his second term and repeatedly pledged that sky-high levies on foreign-made drugs were on the way. But the administration has also used the threat of new levies to strike deals with major companies 鈥� , and 鈥� over the last year, with promises of lower prices for new drugs.
Beyond company-specific rates, a handful of countries have reached trade frameworks with the U.S. to further cap tariffs on drugs sent to the U.S. The , , and will see a 15% U.S. tariff on patented pharmaceuticals, matching previously agreed rates for most goods, and will get 10% 鈥� which Thursday鈥檚 order noted would 鈥渢hen reduce to zero鈥� under future trade agreements. The U.K. previously said it secured a for all British medicines exported to the U.S. for at least three years.
Trump also unveils update to metal tariffs
In addition Thursday, Trump rolled out an update on his 50% tariffs on imported steel, aluminum and copper. Starting Monday, tariff rates on those metals will be calculated based on the 鈥渇ull customs value鈥� of what U.S. customers pay when buying foreign metal under the latest order, which the administration officials claimed will keep importers from other countries from escaping higher payments.
Products fully made of steel, aluminum and copper will continued to be tariffed at 50% for most countries. But the administration is also shifting how tariffs are calculated for derivative metals 鈥� 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 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 piling up
Thursday鈥檚 orders reflect the latest example of Trump tapping into sectoral duties. The president used Section 232 of the 1962 Trade Expansion Act to impose the levies, the same authority he cited to slap import taxes on , lumber and even . And many expect to see more product-specific import taxes down the road.
That鈥檚 because a ruling from the Supreme Court tariffs Trump imposed using another law 鈥� the 1977 International Emergency Economic Powers Act 鈥� to immediately slap tariffs on any country, at nearly any level.
While the Feb. 20 court decision marked a to Trump鈥檚 economic agenda, the president still has to keep taxing imports aggressively. Beyond sectoral levies, on all imports under a separate legal power mere hours after the Supreme Court鈥檚 ruling, but that duty can only last for 150 days. Some two dozen states the new tariffs.
Trump has argued his steep new import taxes are necessary to bring back wealth that was from the U.S. He says they will narrow America鈥檚 decades-old trade deficit and bring manufacturing back to the country. But Trump has also turned to tariffs amid , or in response to . And upending the global supply chain has proven costly for businesses and households that are already strained by rising prices.
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