Tariff Tracker: Will Proposed Chemical Tariffs Impact Pharma?

With tensions escalating and news developments seemingly every hour, the US has released a new list of $200 billion in Chinese goods subject to a proposed 10% tariff. That list includes a range of inorganic and organic chemicals of which China is a major supplier, including common products like chlorine, sulfur, carbon, nitrogen, oxygen, silicon, various acids, fluorides, chlorides, sulfates, nitrates, and more. The suggested tariffs would stand to impact countless US consumer and industrial markets, including, potentially, the pharmaceutical manufacturing industry, which often buys competitively priced basic chemicals from China to use in the production of drugs sold in the US.

In particular, this could pose a problem for generic drug manufacturers, who rely on cheap chemicals from China in order to mass produce medications and turn a profit. Higher import costs could turn into more expensive prescriptions at a time when soaring drug prices have already stretched US consumers thin.

However, the news isn’t all bad. The Trump administration appears to have tabled – for now – a much more harmful 25% tariff on China-sourced vaccines, insulin products and select raw ingredients for pharmaceuticals. This proposed tax was intended to undermine Chinese pharma manufacturers. But it likely would have caused much more significant problems for several major US patent-holders, including Johnson & Johnson, Merck & Co., and Pfizer, who might’ve faced international retaliation in the form of revoked patents and other penalties to their intellectual property holdings. 

Though it seems the US has backed off this threat for now, nothing is 100% safe in the current volatile trade environment - particularly considering that President Trump's most recent threat has been to tax all imports from China - so it’s certainly an industry to watch over the coming weeks and months.

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About the Author

Alecia Mouhanna  is a Corporate Analyst at the Freedonia Group, where she researches and writes about a diverse range of topics, including construction and building materials, chemicals, packaging, and more.