U.S. Biotechs Reveal Tariff Exposure as Trade Inquiry Signals Imminent Pharmaceutical Tariffs

The U.S. Department of Commerce launched a Section 232 investigation into pharmaceutical imports on April 1, 2025, raising the likelihood of tariffs on finished drugs, active pharmaceutical ingredients (APIs), and related components within one to two months2 3 7.
Biotech and pharmaceutical companies are now disclosing their exposure to potential tariffs, with major players like Johnson & Johnson estimating a $400 million impact in 2025, mainly due to retaliatory tariffs from China3.
Nearly 90% of U.S. biotech companies rely on imported components for at least half of their FDA-approved products, highlighting industry vulnerability to new tariffs on imports from the European Union, China, Canada, and others5.
A survey by the Biotechnology Innovation Organization (BIO) shows that 94% of biotech firms anticipate rising manufacturing costs if tariffs are imposed, with many predicting delayed regulatory filings and disrupted innovation pipelines5.
Tariffs threaten to increase costs throughout the supply chain, potentially resulting in higher drug prices, reduced access to affordable medicines, worsened drug shortages, and pressure on R&D budgets, especially for generic drugmakers with slim profit margins2 3 9.
Biotech companies are responding by announcing multi-billion-dollar investments to expand U.S. manufacturing, but reshoring production will take years and may not fully offset supply chain disruptions in the short term3 6.
Smaller biotech firms are particularly vulnerable to tariff risks as they have fewer resources to diversify suppliers or reconfigure global operations, leading to challenges in maintaining competitiveness and innovation4 6.
The U.S. has historically exempted pharmaceuticals from tariffs under WTO agreements, but the current administration's moves could violate international trade rules, escalating trade tensions and retaliatory measures from affected countries8.
Industry analysts warn that new tariffs may not meaningfully shift manufacturing back to the U.S. in the short term and could exacerbate existing drug shortages and affordability challenges7 9.
Stakeholders—including Congress and trade groups—are engaging with the administration to seek longer timelines and alternative policy incentives to stimulate domestic biomanufacturing and protect patient access5 10.