The Biden administration announced Monday it has initiated an investigation into pharmaceutical imports and their potential impact on national security, setting the groundwork for possible
industry-wide tariffs in the coming months.
The Department of Commerce, led by Secretary Howard Lutnick, began the investigation on April 1 under Section 232 authority – the same mechanism President Donald Trump recently employed to expand duties on steel and aluminum imports. The probe encompasses both branded and generic medications, as well as their active pharmaceutical
ingredients.
The investigation was revealed through a federal notice posted online, which will become official once published in the Federal Register on Wednesday. A parallel investigation into semiconductors was also disclosed.
Both Trump and Commerce Secretary Lutnick have previously indicated their intentions to impose taxes on pharmaceutical imports, which had historically been exempt from trade duties. The pharmaceutical industry currently relies heavily on China and India for raw materials and active ingredients, while maintaining significant manufacturing operations in European countries including Switzerland, Ireland and the Netherlands.
“We need our medicines, and we need semiconductors and our electronics to be built in America,” Lutnick stated during an ABC News interview on Sunday, explaining that tariffs would be implemented to encourage domestic production.
Several major pharmaceutical companies have already responded to the anticipated tariffs by announcing substantial investments in U.S. manufacturing facilities. Eli Lilly, Johnson & Johnson, and Novartis have committed billions to construct new drug factories domestically. However, these facilities will require years to complete and won’t immediately address the industry’s dependence on overseas supply chains.
Financial analysts predict the tariffs could significantly impact drugmakers’ bottom lines, potentially forcing cuts to research and development spending. Generic drug manufacturers, who operate with narrower profit margins than branded pharmaceutical companies, may be particularly vulnerable to these additional costs.
The Commerce Department is soliciting public input over a three-week period regarding several key aspects of the investigation. These include domestic production capacity, supply chain concentration, feasibility of expanding U.S. manufacturing, and the potential effects of new trade measures on domestic output.
While Section 232 investigations typically conclude with a report to the president within 270 days, the administration may act more swiftly. Lutnick suggested in his Sunday interview that pharmaceutical tariffs could be implemented within one to two months. According to Leerink Partners analyst David Risinger, the White House could alternatively impose tariffs using the same emergency legal authority it recently employed to implement global 10% tariffs.
The pharmaceutical industry has historically maintained a complex global supply chain, with heavy reliance on international
manufacturing and sourcing. The current investigation signals a potential shift toward reshoring production, though experts note this transition would require significant time and investment. Industry leaders have expressed concerns about the potential impact on drug costs and development pipelines, while supporters of the measure argue it will strengthen American pharmaceutical manufacturing independence and national security.
The Commerce Department’s investigation comes amid broader efforts by the administration to reshape U.S. trade policy and strengthen domestic manufacturing capabilities in critical sectors. The outcome of this probe could significantly alter the pharmaceutical industry’s global supply chain structure and impact drug accessibility and pricing in the American market.
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