In March, the U.S. imported $53 billion products used in the pharmaceutical and medical industries as companies were eager to build stocks in case Donald Trump reached the industry with tariffs.
Imports of pharmaceutical products soared about 160% from the same month last month, nearly doubled since February, reaching the highest record among the Census Bureau records, dating back to 2002.
The rush to buy finished products and ingredients used to make them is one of the earliest signs of how Trump’s massive tariffs on U.S. trading partners have reshaped their global business.
Trump has not announced taxes against the pharmaceutical sector, but the company is preparing for the possibility of possible implementation after the U.S. launches a national security review on the subject last month.
The U.S. president pledged Monday to get European countries to pay more for drugs, while calling on pharmaceutical companies to lower prices for U.S. consumers. But White House officials pointed out that tariffs on pharmaceutical products are "independent" issues.
The United States and the United Kingdom said last week that they would immediately conduct "obviously prioritized" tariff treatment on drugs and ingredients. This commitment will depend on the results of the Washington Pharmaceuticals investigation and comply with supply chain safety requirements.
Ireland imported $28 billion in March, up from $5.5 billion in the same period last year. Several U.S. pharmaceutical companies have manufacturing locations in Ireland, partly because of the relatively low corporate tax rates in Dublin. The country is the third largest exporter of medicines worldwide, with approximately 50 U.S. Food and Drug Administration approved drug and biopharmaceutical plants.
Abiel Reinhart of JPMorgan Chase said branded drug developers “will be able to leverage the import inventory they are now building to mitigate the impact of tariffs when building U.S. manufacturing.”
He said that during the last Trump administration, U.S. corporate tax cuts reduced some motivations for European manufacturing, but added: "The production volume in Europe remains high due to past investments."
Many U.S. pharmaceutical groups have recently issued announcements on expanding domestic manufacturing. Among them is Eli Lilly, which laid out a $27 billion investment plan in February, while Johnson & Johnson said in March it would invest more than $5.5 billion in four factories.
Lilly's CEO told investors on a quarterly earnings call this month that "completed" the company's manufacturing plan "it will be able to provide medicines to the U.S. market completely from the US facility and increase the amount of medicines we export."
Other U.S. pharmaceutical companies stress that they already have a strong domestic manufacturing presence and have established processes to respond to turbulent trade policies.
In its first quarter results, Biogen, a major biotech group, said it "operates a significant manufacturing industry in the U.S.," while Pfizer's chief financial officer told analysts that the company has established a "cross-functional team" to analyze the potential impact in the current "fluid environment."
Merck CEO Rob Davis told analysts that although the company's "maximum exposure" to tariffs is its blockbuster cancer drug Keytruda, it has stocks in the U.S. that can last for 2025.
Industry figures warned that including Johnson and Johnson's CEOs, who said it could lead to drug shortages.
Due to the 1994 World Trade Organization trade agreement, the United States currently has no tariffs on many pharmaceutical companies.
European pharmaceutical companies have also promoted U.S. investment in response to the tariff threat. Astrazeneca said this month it plans to invest further in addition to its 11 U.S. production locations, including transferring production of European-made products to the country.
UK-listed GSK plans to invest tens of billions of dollars in manufacturing and R&D in the United States over the next five years.
Other reports by Jude Webber in Dublin