President Donald Trump is using national security as a justification to implement steep pharmaceutical tariffs on drugs imported from other countries to pressure companies to lower domestic drug prices and boost U.S. production.
Trump signed an executive order on Thursday afternoon imposing 100% tariffs on patented pharmaceutical products and active pharmaceutical ingredients imported from all but five countries as a means to incentivize drugmakers to lower their U.S. prices and onshore their production facilities.
The policy is intended not only to increase U.S. manufacturing of critical pharmaceutical products but also to advance Trump’s Most Favored Nation drug pricing program, which aims to lower U.S. prescription prices to match the lowest prices paid in similar markets.
Most Favored Nation drug pricing has been the crown jewel of the Trump administration’s efforts to lower healthcare costs for U.S. patients, who have some of the highest costs in the world.
A senior administration official told members of the media ahead of the official signing that 13 pharmaceutical companies have officially signed agreements with the administration, and 17 companies have made formal announcements of agreements in the works.
Those companies include Eli Lilly and Novo Nordisk, makers of landmark GLP-1 weight-loss and diabetes drugs, as well as other pharmaceutical giants such as Pfizer, Moderna, and GSK.
The official also said that the announcement should not come as a surprise to the industry.
“This was not a secret,” the official said. “We’ve been talking about this endlessly for the past six months, so I think everybody knows it’s coming. They’ve had plenty of warning, and we are going forward with it.”
Several pharmaceutical giants, including Eli Lilly and Pfizer, have already announced massive plant development projects to onshore manufacturing. Administration officials said pharmaceutical companies have already committed $400 billion in investment for U.S.-based plants.
The official also told reporters that the five countries with exceptions to the new 100% tariff had reached separate trade agreements with the U.S. on other matters.
Pharmaceutical products imported from South Korea, the European Union, Switzerland, and Japan will be subject to a 15% tariff.
Trump administration officials said drug products imported from the United Kingdom will be subject only to a 10% tariff because the British government has agreed to raise its pharmaceutical prices, allowing companies to lower their U.S. prices.
Trump signed the new pharmaceutical tariff order, along with a new tariff structure for imported steel, on the anniversary of the “Liberation Day” tariffs announced in April 2025. Most of those tariffs were deemed by the Supreme Court to be an unconstitutional overreach of presidential authority.
But the new pharmaceutical tariffs are being issued under a different authority: Section 232 of the 1962 Trade Expansion Act, which grants the president the power to impose tariffs or restrict imports for national security purposes.
The Commerce Department last April announced it would begin an investigation into the possible legal hurdles of using Section 232 tariffs for pharmaceuticals, as the statute has traditionally been used for products like steel and aluminum.
Under the new tariff plan, companies that make official Most Favored Nations agreements with the Department of Health and Human Services and commit to building manufacturing facilities will be exempt from the tariffs during construction.
RFK JR. AND DR. OZ SAY HOSPITALS WILL LOSE FUNDING IF THEY SERVE UNHEALTHY FOOD
Construction projects must be completed before January 2029, when Trump’s term in office ends, the official said.
“You’re encouraged to build in America and sell America at your drugs and MFN prices,” the senior official said. “And if you do that, the combination of HHS and the Department of Commerce will protect you and give you a zero tariff while you’re building.”
Large companies will have 120 days to reach a deal with the administration before the tariffs take effect. Smaller companies will have 180 days to make an agreement with the administration.
