President Trump on Thursday placed a 100% tariff on drugmakers that have yet to strike a deal with his administration to sell their products at lower prices to American consumers.
Mr. Trump also overhauled how steel and aluminum tariffs are calculated to simplify compliance.
Under the new tariff regime, imported steel and aluminum would be taxed at 25% of the entire value of a finished product — known as derivative products — containing steel and aluminum. That would replace the current 50% tariff on just the value of steel or aluminum used in a product.
The new tariffs were announced on the first anniversary of Mr. Trump’s Liberation Day, in which he imposed steep tariffs on virtually all of America’s trading partners.
Mr. Trump will impose the pharmaceutical tariffs under Section 232 of the Trade Expansion Act.
It will apply to companies that don’t have agreements or aren’t actively negotiating with the Trump administration to offer most-favored-nation pricing, in which the drugmaker would sell the medicine in the U.S. at the same price it sells it in other countries.
Most of the major drug companies, including Pfizer and Eli Lilly, have struck deals with the White House in exchange for a three-year break from tariffs. So far, the administration has announced deals with 13 pharmaceutical companies.
A White House official said if a drugmaker is not offering most-favored-nation pricing, but is willing to build a manufacturing facility in the U.S., the tariff will be reduced to 20% during construction. The tariff will revert to 100% once the building is complete.
Any drugmaker that offers most-favored-nation pricing and is willing to build in the U.S. will see its tariffs reduced to zero, the official said.
“You’re encouraged to build in America and sell America your drugs at [most favored nation] pricing, and if you do that, the combination of [Health and Human Services] and the Department of Commerce will protect you and give you a zero tariff,” the official said. “If you’re just building and don’t sign an MNF, that’s a 20% tariff.”
Under the new steel tariff, the levy changes depending on the amount of steel and aluminum in the product.
Some goods will have a lower tariff rate, while others will be higher because now the duties will be calculated based on the value of the full imported product rather than just its steel or aluminum content.
The thinking is that the new tariff system will make compliance easier for companies that have struggled to measure the value of steel and aluminum content in their products.
When Trump returned to the White House last year, he increased the aluminum tariff to 25% and expanded the metal tariffs to hundreds of goods, including furniture and screws. Then he doubled those tariffs to 50%.
• Jeff Mordock can be reached at jmordock@washingtontimes.com.
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