President Donald Trump ordered a 100% tax on expensive medicines made abroad as his team tries to get drug companies to make products in the U.S. He first warned about this tax last year but later worked to make deals with the companies to lower prices and bring production to the U.S.
Several companies have accepted these deals.
Those that move their production to the U.S. will face a 20% tax while they adjust, but no tax if they also agree to lower prices to the lowest levels other countries pay. If they don’t bring production to the U.S. within four years, they will be taxed 100%.
Countries like the European Union, Japan, South Korea, Switzerland, and the United Kingdom are not subject to this tax because of previous trade agreements with the U.S.
A top White House official said the tax will help the U.S. not depend too much on other countries for important medicines.
The tax starts on July 31 for some companies and September 29 for others, depending on their size.
In an order signed on April 2, Trump said the U.S. relies too much on foreign imports, which could stop access to life-saving drugs if there’s a disruption in the global supply chain.
He noted that about 53% of patented medicines sold in the U.S. are made outside the country.
Experts say high tariffs might make medicine more expensive.
However, most of the prescriptions in the U.S. are for cheaper, generic drugs. The 100% tax applies only to brand-name medicines that still have patents, not to generic ones.
Trump is using a tax power that wasn’t affected by a Supreme Court decision that ruled against his use of emergency powers for other tariffs.
The new tax on medicines came on the anniversary of Trump starting his strong tariff policy last year.
This policy has faced legal problems and criticism from some lawmakers concerned about higher prices.
The Democratic National Committee said on April 2 that Trump’s actions are harming the economy with a “reckless trade war.”
Despite polls showing people don’t like the tariffs, Trump’s team is still pushing forward.
The White House praised the trade plan on April 2, saying it is making the U.S. rich, strong, and respected again.
White House spokesman Kush Desai said, “This is just the beginning of the President’s transformation of global trade… Americans can count on the best being yet to come.”
On April 2, Trump also changed the tax on foreign steel, aluminum, and copper, aiming to stop steel exporters from lowering their costs by undervaluing their products.
He also changed how the tax is calculated for products with a lot of metal content.
Trump has pushed drug companies to cut prices and invest more in U.S. production.
In December, the president held a White House event to say nine companies—including Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Gilead, GSK, Merck, Novartis, and Sanofi—agreed to lower prices.
The White House also launched a website called TrumpRx in February to help people get medicines at lower prices.
A White House official said companies have also agreed to hundreds of billions of dollars in U.S. investments.
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