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Trump’s New Tariffs Could Drive Up Health Care Costs, Experts Warn
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Key Takeaways
- Tariffs on imports could increase costs and worsen shortages of pharmaceuticals and medical supplies in the US healthcare system.
- The US heavily relies on pharmaceutical imports, with China being a major producer of active pharmaceutical ingredients.
Taxing imports to the US could spell major consequences for health care prices, innovation, and access, as a great amount of medical supplies and ingredients are manufactured overseas.
The Trump administration has imposed a litany of tariffs for almost all imports to the US, with even higher taxes on countries including Canada, Mexico, and China. Trump contends that these tariffs will boost domestic manufacturing, eliminate trade deficits, and strengthen the US economy; however, this announcement carries great implications for the US health care system, particularly as it relates to the availability and costs of medical supplies and medication.1,2 While pharmaceuticals are exempt from the tariffs, the ingredients and materials for drugs, as well as medical devices, are not exempt.
The US depends on other countries a great deal for pharmaceutical imports. In 2022, the US imported approximately $168 billion worth of pharmaceutical products—the most in the world. Coupled with the fact that China produces more active pharmaceutical ingredients (APIs) than any other country, which are used in both generic and brand-name drugs, steep tariffs pose a great threat to the US pharmaceutical industry, health providers, and consumers alike, the American Medical Manufacturer Association reported.3
Multiple analyses have suggested that imposing tariffs on US imports could drastically alter the price of health care in the US | image credit: zimmytws - stock.adobe.com
“Generic manufacturers simply can’t absorb new costs,” John Murphy III, president and CEO of the Association for Accessible Medicines, said in a statement.4 Many generic drugs are manufactured overseas due to lower production costs and other difficulties that hinder making them on US soil. Manufacturers already sell these products at very low prices and added financial strain forces many to withdraw from the market, Murphy added. “The overall value of all generic sales in the U.S. has gone down by $6.4 billion in five years despite growth in volume and new generic launches. Tariffs would make this much worse.”
As these tariffs potentially force generic drug manufacturers’ withdrawal from the market, this shift could exacerbate existing drug shortages and increase patients’ health care costs. The Healthcare Distribution Alliance noted how distributors already experience minimal profit margins, registering at just 0.3%. The ripple effect of these tariffs will place added pressure on the industry and those costs will trickle down to payers, and then patients—even those with Medicaid or Medicare.5
Medical devices and supplies will be also impacted as many of these products are imported from countries such as Mexico, Canada, and India. Hospitals will especially feel these effects as they depend on everyday items like gloves, gowns, and syringes, as well as bigger equipment for x-rays.
In a statement from February of this year, Scott Whitaker, president and CEO of AdvaMed, the largest medical device association, also expressed concerns for the toll tariffs could take on the medical technology industry.6 He noted how the FDA heavily regulates the industry and makes the final decisions when it comes to which products can be brought to market. Med-tech products play a great role in reimbursement, which often goes through Medicare, Medicaid, and Veterans Affairs. “This means tariffs impact American companies similarly to an excise tax, which would lead to less [research and development]/innovation, layoffs, higher prices for the above-mentioned payers and patients, or all of the above. Additionally, moving manufacturing from one facility to a different or new facility requires FDA approval, which makes it difficult in the short term to adjust production to the U.S,” he stated.
According to a report from The Budget Lab at Yale University, the price for basic pharmaceuticals is estimated to rise by nearly 5% due to reciprocal tariffs.7
In light of these challenges, various industry groups such as AdvaMed, The Healthcare Distribution Alliance, the Association for Accessible Medicines, and others have pushed for exemptions of medical products from tariffs and promoting policies that encourage domestic manufacturing to strengthen the healthcare supply chain. However, establishing new manufacturing facilities domestically presents significant challenges, including high costs and extended timelines.3
In Trump’s first term, tariffs imposed on Chinese imports did not apply to the majority of medical devices. With Trump expected to make a new announcement on Wednesday, April 9, it remains unclear how medical and pharmaceutical imports could be impacted.8
References
1. Picchi A. See the full list of reciprocal tariffs by country from Trump’s “Liberation Day” chart. CBS News. Updated April 5, 2025. Accessed April 7, 2025. https://www.cbsnews.com/news/trump-reciprocal-tariffs-liberation-day-list/
2. Ramkumar A. The ripple effect Trump’s tariffs will have on the rest of his agenda. Wall Street Journal. April 7, 2025. Accessed April 7, 2025. https://www.wsj.com/economy/trade/trump-tariffs-second-term-agenda-a2fc368a
3. Leake L. Patients will pay more for prescription meds and face drug shortages amid Trump tariffs, pharma groups warn. American Medical Manufacturer Association. Updated February 17, 2025. Accessed April 7, 2025. https://www.ammaunited.org/2025/patients-will-pay-more-for-prescription-meds-and-face-drug-shortages-amid-trump-tariffs-pharma-groups-war/
4. Association for Accessible Medicines comments on new tariffs. Association for Accessible Medicines. News release. February 2, 2025. Accessed April 7, 2025. https://accessiblemeds.org/resources/press-releases/aam-comments-new-tariffs/
5. Trump tariffs could raise medication costs and exacerbate shortages, drug trade groups warn. American Medical Manufacturer Association. February 16, 2025. Accessed April 7, 2025. https://www.ammaunited.org/2025/trump-tariffs-could-raise-medication-costs-and-exacerbate-shortages-drug-trade-groups-war/
6. AdvaMed seeks medical technology exemption from all tariffs. AdvaMed. News release. AdvaMed. February 1, 2025. Accessed April 7, 2025. https://www.advamed.org/industry-updates/news/advamed-seeks-medical-technology-exemption-from-all-tariffs/
7. The fiscal, economic, and distributional effects of illustrative “reciprocal” U.S. tariffs. The Budget Lab. Updated February 19, 2025. Accessed April 7, 2025. https://budgetlab.yale.edu/research/fiscal-economic-and-distributional-effects-illustrative-reciprocal-us-tariffs
9. Hopkins JS. Pharma companies lobby for delayed, gradual drug tariffs. Wall Street Journal. Updated April 1, 2025. Accessed April 7, 2025. https://www.wsj.com/livecoverage/trump-tariffs-trade-war-stock-market-04-01-2025/card/X90i4gweVDkWmu2CwY3l?mod=article_inline
