US tariffs remain a persistent issue, with President Trump threatening a 100% tariff on pharmaceuticals. Effective July 31, the tariff will affect 17 major pharmaceutical companies, including Pfizer, Novo Nordisk, and others. Trump also announced that a 15% tax on pharmaceuticals from the European Union, South Korea, Japan, Switzerland, and Liechtenstein. The president will also impose a 10% tariff on covered products from the United Kingdom, with the possibility of reducing it to zero. The executive order will exempt specific products, such as orphan drugs and animal-health drugs, from countries with trade deals. Due to the volume of medications entering the US, the 100% levy can significantly impact supply chains.
Why is Trump Threatening An 100% Tariff?
The primary goal behind Trump’s imposing a 100% tariff is to use it as a tool for trade leverage. Pharmaceuticals manufactured in countries without trade agreements with the US will be primarily affected by the levies. Similarly, Trump will cap countries with trade deals with the US at 15%. Drug makers can avoid Trump’s 100% tariff by finalizing trade deals with the US that provide “most favored nation” pricing. Another goal is to bring drug manufacturing back to the US by making it more convenient than importing. The tariffs follow a Section 232 investigation that found heavy reliance on pharmaceutical imports threatened national security and public health in the event of disruptions.
What Can This Tariff Mean for International Shipping?
With the US soon enforcing tariffs on pharmaceuticals, the levies could affect shipping in numerous ways. A major impact on countries that don’t reach an agreement with the US is the imposition of significant import costs. In turn, shippers will feel higher costs across different parts of the supply chain, including by the customer. Importers may begin sourcing from other countries that are only lightly affected by the tariffs, such as the UK. Another outcome is that buyers could begin getting pharmaceuticals made in the US instead of importing them. Supporters believe that the levies could lower drug prices and bring production back to the US.
While tariffs of up to 100% on pharmaceutical imports can be alarming, they should not halt imports. Shippers should, however, take the necessary precautions to prevent disruptions, such as delays and financial losses. A major step shippers can take is to speak with a customs broker such as A1 Worldwide Logistics. Brokers are licensed individuals or corporations that arrange customs clearance for importers. In the US, they ensure compliance with Customs and Border Protection (CBP) requirements. Brokers do this by providing services such as calculating duties, preparing documentation, filing ISFS, and more. Contact our brokers at info@a1wwl.com or 305-423-9456 to ensure successful customs clearance from anywhere in the world.
