WASHINGTON, DC – The Canadian pharmaceutical industry is sounding the alarm after U.S. President Donald Trump indicated his administration is planning to impose tariffs as high as 200 per cent on imported pharmaceutical products. While Canada may not be the primary target of these proposed duties, industry representatives warn that parts of the Canadian sector could still be caught in the crossfire, potentially imperilling domestic drug production.
On Tuesday, President Trump publicly floated the idea of these significant levies, stating that drugmakers would be given “about a year, a year and a half to come in” before the duties would take effect. Speaking at a Cabinet meeting at the White House, Trump emphasized, “If they have to bring the pharmaceuticals into the country … they’re going to be tariffed at a very, very high rate, like 200 per cent. We’ll give them a certain period of time to get their act together.”
Canada’s Vulnerability in the Crosshairs
Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPA), expressed concern that Canada could inadvertently suffer the consequences of Trump’s broader push to reduce American reliance on drugs imported from countries like China and India. “Canada is not the target but we could get caught in the crossfire if there are broad-based tariffs on pharmaceuticals,” Keon stated.
Despite Canadian exports accounting for less than five per cent of all generic medicines sold in the U.S., Keon warns that the loss of access to the American market could make it impractical for some companies in Canada to continue producing certain generic medicines for the domestic market. This could have significant implications for Canada’s drug supply and its ability to maintain a robust domestic pharmaceutical manufacturing capacity.
National Security and Supply Chain Concerns Driving U.S. Policy
The Trump administration launched an investigation into the pharmaceutical industry in April, citing national security concerns stemming from extensive reliance on foreign production of medicine. The U.S. Commerce Department is currently conducting this Section 232 investigation to assess whether pharmaceutical imports threaten national security. The report from this investigation has not yet been issued.
However, Commerce Secretary Howard Lutnick told CNBC after Tuesday’s Cabinet meeting that details on pharmaceutical tariffs “will come at the end of the month,” noting that studies for both pharmaceuticals and semiconductors are nearing completion.
Industry Pushback and Hope for Exemption
Pharmaceutical companies across the globe have voiced strong opposition to the proposed tariffs, arguing that such measures could lead to increased costs for consumers, exacerbate drug shortages, and ultimately reduce patient access to essential medicines. Companies with global manufacturing footprints stress that relocating production to the U.S. would require a major commitment of resources and could take years.
“Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures for patients,” said Alex Schriver, spokesman for the U.S. industry group PhRMA.
Amidst these concerns, Jim Keon of the CGPA remains hopeful that a new economic and security agreement currently being negotiated between Canada and the United States will ensure pharmaceuticals remain tariff-free. Officials from Ottawa and the Trump administration have reportedly set a July 21 target date to finalize this deal. Keon stated, “We have learned over the last six to eight months not to overreact to the statements and wait and see what actually comes out in the executive order in the tariffs themselves.”
The market reaction to Trump’s comments on Tuesday was largely muted. Shares of major U.S. drugmakers, including Pfizer, Merck, Eli Lilly, Bristol Myers, and Johnson & Johnson, saw initial dips during the Cabinet meeting but largely recovered by the end of the trading day.
