The Trump Administration is reportedly planning to impose big new tariffs on pharmaceuticals supplied primarily by U.S. allies. The tariffs would be imposed under Section 232 of the Trade Expansion Act of 1962, which allows the president to restrict imports that threaten to impair U.S. national security. However, in this case, it is tariffs, not imports, that threaten U.S. national security. Pharmaceutical tariffs in particular would weaken our ties with key U.S. allies.
Since the late 1990s, pharmaceutical products have largely been exempt from tariffs, benefiting U.S. patients and medical providers by keeping costs low, providing for resilient supply chains, and preventing foreign governments from blocking U.S. pharmaceutical exports based on dubious “national security” excuses or other reasons.
The most comprehensive analysis of this policy was provided by a 2022 report from the National Academies of Sciences, Engineering, and Medicine, “Building Resilience into the Nation’s Medical Product Supply Chains,” which concluded that attempting to onshore global supply chains could increase the cost of medical products.
The dangers of relying entirely on domestic production for critical medical goods were illustrated by the impact of Hurricane Helene in 2024. Helene disrupted the production of IV supplies in North Carolina, and the federal government eventually turned to imports to mitigate the domestic supply disruption.
The National Academies report encouraged the United States and other major producers of medical products to negotiate stronger rules to prohibit export bans and restrictions on key components of global medical product supply chains, including pharmaceutical goods. This approach would expand reciprocal zero-tariff rules for most pharmaceutical products and the materials used to produce them.
If the United States instead imposes new restrictions on imports of medical supplies, Americans will pay more as a result. Just about every part of this key health care sector will be damaged, including ingredients in pharmaceuticals, finished brand products, and generic medications, whose manufacturers are on particularly price-sensitive margins to remain afloat. That’s particularly significant to the federal government as the largest buyer of prescription drugs in the United States.
Cutting tariffs is a stronger approach. While the government should be cautious about providing narrow exclusions from tariffs, exempting pharmaceutical manufacturers from steel and aluminum tariffs would facilitate the expansion of new facilities in the United States. Broad-based tariff relief would help even more, since tariffs impose hidden costs on the economy and thereby erode our industrial base.
Finally, National Taxpayers Union encourages Congress to enact legislation amending the Trade Expansion Act of 1962 to require congressional approval before the president adjusts imports that are determined to impair national security. This would help assure that any import restrictions are based on legitimate national security threats and are not just thinly disguised excuses to restrict imports.