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Trump again shows he is captive to his need to garner headlines for showy and regularly counterproductive actions, and his addiction to bad ideology. He still thinks tariffs can magic America back into being a manufacturing powerhouse. Not only is China already there, with so much invested base that it has an overcapacity problem producing such fierce price competition that officials are having to implement policies to combat it, but even if the US miraculously made real headway, most of the plants would be heavily automated, as in generate comparatively few jobs.
And that’s before getting to many other issues commentators, including writers on this humble site, have stressed, as in the lack of needed skills here, particularly at the supervisory and factory manager level. And then in “gang that can’t shoot straight” manner, the Trump team actively sabotages getting help from foreign companies who are actual investing in building plants here via the ICE raid on Hyundai’s plant in Georgia,
The latest Trump show of muscle is his declaration of yet more tariffs, here at the nosebleed level of 100%:
Per the New York Times:
The president also said the United States would begin imposing a 50 percent tariff on imported kitchen cabinets, bathroom vanities and associated products, along with a 30 percent tariff on imported furniture and a 25 percent tariff on foreign trucks.
Perhaps readers can correct me, but I have the strong impression the US furniture industry (concentrated in North Carolina) was offshored or otherwise abandoned in the 1990s and early 2000s, so that nearly all US furniture comes from abroad, and one assumes at the lower price points, even more so.
In other words, this looks like yet another Trump sacrifice of ordinary consumers to advance his agenda to drive the US back to the late 1800s, including its lack of reliable medications. Recall that Trump previously spared patients from drug price increases on imports by carving them out from the 50% tariffs on Indian imports over its refusal to stop buying Russia oil.
In addition, these tariffs are not likely to be rolled back if Trump loses his case on the use of emergency authority to impose tariffs. Here he is trying to use a different set of provisions. From CNBC:
The Trump administration in April initiated a so-called Section 232 investigation into pharmaceutical products, which allows the Secretary of Commerce to examine the impact of imports on national security. The president similarly used that power to impose tariffs on other goods, such as cars and aluminum.
If the Administration cut corners, we might see legal challenges, but it is way too early to tell. The Commerce Department seems to be relying on the fact that the value of drug rose by nearly three time from 2014 to 2024, to $219 billion. That does look disproportionate to the overall increase reported by Statista, but one wonders if the two data sets were prepared on a similar basis:
As we’ll soon see, the impact may not be as bad as it looks, but doubling the cost of at least some and perhaps many drugs is harmful to patients taking them and will also increase insurance costs, both of private insurers as well as Medicare, Medicaid, and the VA. So one has to wonder if an additional objective is to create budget stresses in Federally funded health programs to justify further cuts.
Some initial reactions on the medical effects:
100% tariff on Pharmaceutical products
Estimated to add $200 billion in additional cost traditionally 60~70% is passed directly to insurers and patient that means $60-140 billion in additional healthcare cost for patients borne by Americans in 2026-2028.… pic.twitter.com/JAXo1DMV7q
— “Riseyourself” RL Narayanan (@rlnarayanan) September 26, 2025
From CNBC:
In public comments to the government in May, Eli Lilly said tariffs will “deprive manufacturers of necessary capital to both innovate and invest in reshoring” since they will redirect capital to cushion the impact of the levies. That was among the hundreds of comments released by the Department of Commerce in late May in relation to its 232 investigation into the pharmaceutical industry.
Some health policy experts also say the move could disrupt the drug supply chain at the expense of U.S. patients, driving up costs for certain treatments or even exacerbating the medication shortages plaguing the nation. Drugmakers often rely on a global network of manufacturing sites for different steps of the production process.
And from CNN:
A leading pharmaceutical industry association warned that medicines have previously been exempt from tariffs because of increased cost and shortage concerns.
“PhRMA companies continue to announce hundreds of billions in new US investments thanks to President Trump’s pro-growth tax and regulatory policies,” Alex Schriver, senior vice president at the Pharmaceutical Research and Manufacturers of America, known as PhRMA, said in a statement.
“Tariffs risk those plans because every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures.”
The pharma companies’ moves are not expected to decrease the United States’ reliance on foreign sources for key pharmaceutical ingredients and drugs, experts say. The pharmaceutical industry is a global web, with ingredients and finished drugs being manufactured in a multitude of locations around the world.
The fact that the alarm comes from industry sources does not mean it is necessarily wrong.
But this scheme is so vague and also conflicts with other Trump deals, so it is hard to know what its impact will be. For instance, Reuters points out that these new tariffs should be superseded by the EU, UK, and Japan trade agreements, which provide for lower levies. From Reuters:
The Trump administration’s trade deals with Japan, the EU, and the United Kingdom include provisions that cap tariffs for specific products such as autos, semiconductors and pharmaceuticals, which means the new higher national security tariffs likely won’t raise them above agreed rates.
The European Union agreed to pay the U.S. a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors, according to a statement released by the White House in July.
Under the trade deal agreed with Japan, “treatment of specific or compound duty rates shall be identical to the treatment provided to products of the European Union,” according to a statement released by the White House in early September.
However, investors did not seem entirely comforted by Reuters’ reading. Pharma stocks in the EU did not react, but those in Japan and Asia fell on the tariff news.
Bloomberg also noted many key players already have US plants and should thus escape the tariff blow. From Trump Pharma Tariff Plan Looks Like Reprieve for Many Drugmakers:
President Donald Trump’s plan to impose a 100% tariff on branded and patented drug imports was greeted with a shrug by many investors, who are betting his exemptions for companies with US manufacturing will soften any blow.
Many big drugmakers already have US plants or are building them, with companies such as Merck & Co., Novo Nordisk A/S and Eli Lilly & Co. having started US builds since 2023.
Trump’s announcement looks like a “win” for the pharmaceutical industry, according to Jefferies analysts, as many major players have some production presence domestically and have announced increased investment directly tied towards local manufacturing.
As many here know, China is an essential provider of pharma active products and also some drugs. The US extended its temporary arrangement with China until November 10, with the maximum tariff rate on Chinese goods set at 30%.
For patients, going from zero to 30% will be painful but less bad than 100%. Expect stockpiling as we saw before the imposition of the original Liberation Day tariffs.
Some analysts have gone further in claiming that there is less to these drug taxes than meets the eye. For instance, again from CNN:
Trump indicated in a Truth Social post Thursday what would be needed to avoid the tariffs.
“‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction,’” Trump wrote in a Truth Social post. “There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started.”
However, it can take time to put shovels in the ground so it’s unclear whether these promises will be enough to avoid the tariffs – assuming the drug companies aren’t already in construction elsewhere in the US. Eli Lilly said it could take up to five years for the plants to be operational.
That distinction could blunt the impact of the levies.
“The actual comment from the President is direct but its impact may be somewhere between nebulous and negligible,” Jared Holz, an analyst with Mizuho, said in a note to clients. “All major players have some production presence domestically and almost all have announced increased investment directly tied towards local manufacturing.”
If shortages nevertheless develop or there are enough sob stories amplified by the media, Trump may yet again go TACO by either loosening his notion of what under construction amounts to or giving waivers for particular drugs.
It may be that Indian drugmakers are the actual main target. Recall that Trump had exempted Indian suppliers from his 50% tariffs. Many assume that they are again carved out because India’s pharma exports are nearly all generics and the headlines emphasize that Trump is focusing on patented products.
But he actually included branded products too. So does that mean any generic that has something other than the compound name on the box? One assumes so, and per the reactions from the media and investors in India, they expect to be hit to a meaningful degree.
🚨 100% tariffs on branded/patented pharma products
how bad is bad for India?
– ~20B worth of pharma goods imported/year in US
– < 10B is branded/patented.
– ~50B are the revenues of Indian Pharma annually
– Total 2% i.e. ~1B is from exported branded/patented products to US… pic.twitter.com/iIMfMlcJoB
— pankaj padwal (@padwalpankaj9) September 26, 2025
More detail from India’s Economic Times. The article does list some of the drugmakers that saw big price declines but does not shed light on what the “branded” may amount to:
Following the announcement, Indian pharmaceutical stocks saw sharp losses on Friday, September 26…
What would be the impact on Indian drug manufacturers?
India remains one of the largest suppliers of medicines to the U.S. In 2024, India’s pharmaceutical exports were valued at USD 12.72 billion, making it the country’s largest industrial export sector. Indian pharmaceutical companies play a crucial role in the U.S. healthcare system. In 2022, they accounted for four out of every ten prescriptions filled in the U.S. According to reports, medicines from Indian firms saved the U.S. healthcare system USD 219 billion in 2022 alone, and USD 1.3 trillion between 2013 and 2022. Over the next five years, generics from India are projected to deliver an additional USD 1.3 trillion in savings.
So unfortunately, this is yet another measure where some patients are going suffer ginormous increases if they are so unlucky as to be exposed and don’t have an unbranded generic alternative. We are sure to see more detail in the coming days.
Reader Jason Boxman also called out another tariff shoe about to drop. From the New York Times story:
On Wednesday, the Trump administration announced that it was beginning new investigations under the law into imports of robotics, industrial machinery and medical devices, which could result in tariffs.
As he pointed out:
That’s pretty hilarious, that they’re going after industrial machinery and robots, almost as if, they really don’t understand how crucial these things are to rebuilding manufacturing in America.
So it seems that all that Trump and his merry band know how to do is demolition, and they appear to assume that rebuilding will happen all on its own. And it will be far too late to change course when the reverse happens.
