On September 25, local time, U.S. President Trump announced on social media that the United States will impose 100% tariffs on patented and branded drugs starting October 1, unless pharmaceutical companies establish manufacturing facilities in America. Trump stated: "If construction has already begun, these drugs will not be subject to tariffs."

Trump has previously threatened to impose tariffs on imported drugs multiple times. In early August, Trump indicated in an interview that the U.S. would first impose "small tariffs" on imported drugs and increase rates within about a year. He stated: "In one year, at most one and a half years, the rate will rise to 150%, and then to 250%, because we want drugs to be manufactured in our country." However, he did not reveal what the initial tariff rate for drugs would be.

Trump claims that imposing tariffs on imported drugs aims to reduce drug prices in America. However, high drug tariffs may produce the opposite effect, disrupting complex supply chains, driving cheap foreign generic drugs out of the U.S. market, and causing drug shortages.

ING Groep NV healthcare economist Diederik Stadig pointed out last month that "tariffs will primarily hurt consumers, who will directly feel inflationary pressure when buying drugs at pharmacies, while also being indirectly hit by higher insurance premiums," with low-income families and elderly people bearing the brunt.

Pharmaceutical companies have already increased investments in the United States. Swiss pharmaceutical giant Roche announced in April that it would invest $50 billion to expand its U.S. operations. Johnson & Johnson (JNJ.US) plans to invest $55 billion in the U.S. over the next four years, with CEO Joaquin Duato recently stating that the company aims to supply the U.S. market entirely through domestic manufacturing facilities.

However, building a pharmaceutical plant from scratch in the U.S. is costly and may take several years. Moreover, even establishing plants in America may not allow pharmaceutical companies to avoid Trump's tariffs, as imported raw materials used in drugs could also be subject to tariffs.

Analysts point out that European pharmaceutical giants heavily dependent on the U.S. market—such as Novartis (NVS.US), Roche, Sanofi (SNY.US), AstraZeneca (AZN.US), and Bayer—will face severe impacts. They are forced into painful choices: either bear massive tariff costs or invest hundreds of billions of dollars in the short term to relocate key production lines to the U.S. or its free trade partners (such as possibly Mexico, Canada, or even Puerto Rico). This could lead to the shrinkage of European domestic pharmaceutical industries and unemployment.

However, supply chain relocation is a lengthy, complex, and extremely costly process that cannot be easily completed within a year or two, inevitably accompanied by chaos and supply disruption risks.