By: TPS Staff
President Trump’s political platform has taken a strong stance on restoring domestic industry. The administration expanded and initiated investigations into pharmaceutical and semiconductor imports under Section 232 of the Trade Expansion Act of 1962, citing national security concerns. In a continuation of protectionist trade policy, Trump proposed tariffs on imported pharmaceuticals that could reach up to 250% over an 18-month phase-in period, as reported by Forbes.
As with earlier trade announcements, markets initially reacted with volatility. However, the administration offered a grace period of 12 to 18 months, which may allow pharmaceutical firms time to adjust global supply chains and scale up domestic production before the tariffs take full effect.
In response to the policy shift, major pharmaceutical companies have announced aggressive U.S. investment plans:
AstraZeneca committed to a $50 billion U.S. investment by 2030, including new manufacturing sites and research centers across several states.
Eli Lilly is allocating $27 billion to build four new manufacturing plants in the U.S., primarily focused on active pharmaceutical ingredients and injectable drugs.
Merck recently broke ground on a $1 billion biologics facility in Delaware, expected to support production of cancer therapies and next-generation biologics.
Other global players such as Johnson & Johnson, Roche, AbbVie, and Regeneron have also announced expansion plans, reflecting a broad industry trend toward reshoring operations.
For years, many pharmaceutical giants shifted manufacturing and intellectual property to low-tax jurisdictions such as Ireland. The strategy, or loophole, takes advantage of transfer pricing and was unintentionally facilitated by the 2017 Trump tax overhaul. It allowed companies to shift profits to countries with lower corporate tax rates, reducing their U.S. tax liabilities.
According to a Congressional oversight letter from Senator Elizabeth Warren and Representative Jann Schakowsky, pharmaceutical companies such as Johnson & Johnson, Pfizer, Merck, Amgen, and AbbVie have reported minimal to no tax liability since 2018. For perspective, these companies together earned approximately $52.96 billion in 2024 alone and have earned around $1.89 trillion since 2018, according to public financial reports expressed in the letter.
In anticipation of upcoming tariffs, many companies have begun stockpiling pharmaceuticals to mitigate their effect and cover demand while moving manufacturing. The U.S. has seen double the shipments of high-demand drugs such as hormone treatments, especially those used for obesity and diabetes.
Recent reports estimate that Ireland accounted for approximately 40% of the U.S. biopharmaceutical trade deficit as of 2023. While official export values can fluctuate, Ireland’s contribution to the U.S. pharmaceutical supply chain has been growing in recent years, making it a focal point in discussions of trade balance.
This trend mirrors similar behaviors in the automotive and electronics sectors, where companies are front-loading shipments ahead of tariff deadlines.
Policy Incentives: The “Big Beautiful Bill”
As part of a broader industrial strategy, the Trump administration introduced a legislative package dubbed the “Big Beautiful Bill.” This bill includes a suite of incentives aimed at encouraging domestic pharmaceutical production:
Immediate deductions for R&D and equipment expenses
Higher interest deduction caps for capital-intensive projects
Streamlined regulatory approvals for U.S.-based drug facilities
Offsets for intellectual property tax penalties previously driving offshoring
Though the bill is still under legislative review, Pharmacy Times and other policy outlets have described it as a cornerstone of the administration’s reshoring agenda.
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