Trump Tariffs Poised to Hit Drug Tool and Packaging Manufacturers: Industry Faces Rising Costs and Supply Chain Challenges

Impact of Tariffs on Pharmaceutical Manufacturers:

Proposed tariffs on pharmaceutical imports (up to 25% or more) could significantly increase manufacturing costs for both branded and generic drugs12.
Approximately 90% of U.S. biotech companies rely on imported ingredients, making supply chains highly vulnerable to cost hikes and disruptions2.

Challenges for Generic Drug Makers:

Generic drug manufacturers, already operating on low margins, face substantial risk from tariff-induced cost increases, potentially leading to shortages or reduced quality23.
The Association for Accessible Medicines (AAM) warned that tariffs might exacerbate an already fragile supply chain for generic injectable drugs2.

Global Supply Chain Dilemma:

Many active pharmaceutical ingredients (APIs) are sourced from countries like Ireland, France, and Germany, which host a significant share of FDA-registered manufacturing facilities1.
Onshoring API production would be expensive due to environmental and labor concerns in the U.S., leading to a complex supply chain dilemma1.

Sector Responses and Lobbying:

Several major drugmakers, including Pfizer, Johnson & Johnson, and Eli Lilly, are lobbying against tariffs while simultaneously committing to larger U.S. manufacturing investments to mitigate risks12.
Trade associations and analysts have highlighted that tariffs may not necessarily deliver the desired benefits of domestic manufacturing growth and could pressure mid-tier and small manufacturers the hardest14.

Economic and Political Considerations:

Trump administration’s broader tariff strategy targets global trade imbalances, with a focus on reshoring industries like pharmaceuticals, steel, and semiconductors23.
Despite intended outcomes, historical data shows that similar tariffs during Trump's earlier term had mixed results, with limited impact on domestic manufacturing4.

Potential Long-Term Effects:

Manufacturers are advised to strategize around supply chain adjustments, explore alternative sourcing and logistics, and prepare for increased operational costs3.
Rising drug prices for U.S. consumers are likely if increased manufacturing costs are passed downstream, heightening industry and public concerns34.

This combination of immediate tariff threats, structural supply chain issues, and global production interdependence positions the pharmaceutical tool and packaging industries at a challenging crossroads.

Sources:

1. https://www.fiercepharma.com/pharma/trumps-liberation-day-tariffs-seem-spare-pharma-threat-industry-specific-duties-and

2. https://www.pharmamanufacturing.com/editors-review/article/55278069/editors-review-threat-of-trump-tariffs-on-pharmaceuticals-puts-industry-on-further-edge

3. https://www.pwc.com/us/en/services/tax/library/tariff-industry-analysis-pharma-life-science-and-medical-device.html

4. https://www.manufacturingdive.com/news/trump-tariffs-steel-reshoring-jobs-supply-chain-china-mexico-canada/742350/