President-elect Donald Trump's proposal to increase tariffs on products from Mexico, Canada and China could increase pharmaceutical costs and disrupt supply, The Hill reported Dec. 31.
Mr. Trump has suggested 20% to 25% tariffs on imports from Mexico and Canada and higher tariffs on Chinese items. These three countries are among the top five which the U.S. imports pharmaceuticals, creating uncertainty for medication prices and availability.
Higher tariffs would affect about 75% of medical devices marketed in the U.S. and squeeze the already narrow margins of the generic drug market.
Three takeaways from The Hill:
1. Generic drugs are especially prone to shortages.
The U.S. imports a significant amount of active pharmaceutical ingredients for these medicines from China. S&P Global Ratings expects limited disruption.
"While China accounts for a growing portion of U.S. pharmaceutical imports, particularly APIs used in generic drugs, we believe the Trump administration is unlikely to impose hefty tariffs on these imports to avoid increasing U.S. drug costs," Arthur Wong, healthcare managing director at S&P Global Ratings, told the outlet.
2. Mr. Trump has said the proposed tariffs aim to bolster domestic manufacturing.
A White House transition spokesperson said: "President Trump has promised tariff policies that protect the American manufacturers and working men and women from the unfair practices of foreign companies and foreign markets. As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation."
Dan Izhaky, president of the American Medical Manufacturers Association, said launching a medical device manufacturing facility would take 18 to 24 months. Producing medications, he added, could take three to five years.
3. The Biden administration raised tariff rates earlier this year on select healthcare equipment made in China.
The items included syringes, needles, personal protective equipment and surgical gloves. President Joe Biden said the increases were designed to combat low-quality products.