By Michael Erman and Patrick Wingrove
(Reuters) – President Donald Trump is facing pressure from U.S. hospitals and generic drugmakers to exempt medical goods from his new tariffs on Chinese imports, as they join big pharma lobbyists who have said such trade barriers will cause shortages of medicines and higher prices in the United States.
The Republican president on Tuesday imposed the 10% tariffs on all Chinese goods imported to the United States, and China responded with its own targeted tariffs. Trump suspended a threat of 25% tariffs on goods from Mexico and Canada, agreeing to a 30-day pause after speaking with the leaders of those countries. Trump has set the European Union as his next target.
The American Hospital Association wrote in a letter to Trump on Tuesday that the tariffs will affect cancer and heart medicines as well as antibiotics like amoxicillin from China.
Since 1994, the United States and its major trading partners have agreed to reciprocal tariff elimination for pharmaceutical products and chemicals used in drug production, according to the U.S. Trade Representative’s office.
In the weeks leading up to the sanctions announcement, four lobbyists and one pharmaceutical executive who spoke to Reuters on the condition of anonymity said they had pressed the Trump administration for assurances that their products would be excluded from any tariffs.
The White House did not immediately respond to a request for comment.
A White House official told Reuters before the tariffs were announced that any exemptions would be “few and far between.”
Nearly 30% of raw ingredients used to make critical drugs come from China, according to the hospital lobbying group, which represents almost 5,000 U.S. hospitals and healthcare systems. A third of disposable face masks and nearly all plastic gloves used in healthcare also come from China, it said.
“Despite ongoing efforts to build the domestic supply chain, the U.S. healthcare system relies significantly on international sources,” it wrote in the letter to Trump.
The Association for Accessible Medicines, a generic medicines lobby group, said it too was asking the administration to provide an exemption, citing the tight profit margins makers of low-cost medicines face and the history of drug shortages.
“Imposing tariffs on generics risks simply compounding that problem, because there is limited opportunity for generics to absorb those costs,” said Craig Burton, the group’s senior vice president of policy.
Medicines cost more in the United States than any other country. The United States imported more than $176 billion of pharmaceutical products from overseas in 2023, close to $6 billion of which came from China, according to U.S. trade data. That includes antibiotics including amoxicillin and penicillin, according to a U.S. Food and Drug Administration database.
Top executives at big branded drugmakers including Merck, Amgen and Bristol-Myers said this week the impact of the 10% China tariffs on them would not be significant.
Ireland accounts for $41 billion worth of drug imports to the United States, according to the U.S. Trade Representative’s office. Germany and Switzerland are also top exporters to the United States.
U.S. tariffs on Europe, which has become a base of manufacturing for complex biologic drugs, would be more alarming for the world’s big pharmaceutical companies, Morningstar analyst Karen Andersen said.
“It is true that there are a lot of branded drug companies that source active ingredients from China, but when you think about the bigger, foundational blockbuster products, most of those are made either in-house or by partners in the U.S. or Europe,” Andersen said.
“As part of the (regulatory) process, manufacturing sites have to be approved, and all the test batches have to be monitored for consistency of active ingredient and shelf life. Moving all of that to the U.S. will just take time,” UBS pharmaceuticals analyst Trung Huynh added.
It can take five to 10 years to build a new pharmaceutical plant and get it compliant with U.S. regulatory requirements, according to pharmaceutical lobbying group PhRMA.
(Reporting by Michael Erman and Patrick Wingrove in New York, Deena Beasley in Los Angeles and Andrea Shalal in Washington; Editing by Caroline Humer and Will Dunham)
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