Targeted Onshoring's Impact on Domestic Pharma Manufacturing

In April of this year, President Trump announced plans to impose 100% tariffs on branded pharmaceutical imports. At the time, he set a deadline of July 31, 2026, for major pharmaceutical companies to negotiate onshoring agreements (which would reduce the tariffs to 20%).

Also, companies that negotiated deals with the administration as part of the President’s MFN initiative would be exempt from these tariffs. Further complicating the issue, regions with previously negotiated tariff deals would also be exempt from 100% tariffs on pharma imports.

This move is part of the President’s plans to strengthen domestic manufacturing and reduce the United States’ reliance on imports.

Pharmaceutical Executive spoke with Ryan Last, a senior associate at Troutman Pepper Locke, about the situation pharmaceutical and biotech companies face with just one month remaining before the initial deadline hits. While previous deadlines have passed by, pharma companies still have time to prepare and make plans, while also bracing for the larger impact that these tariffs may have.

Pharmaceutical Executive: How will targeted onshoring impact pharma’s domestic manufacturing?
Ryan Last: Targeted reshoring is very hard to do, because pharmaceutical products themselves operate on razor-thin margins. So, tariffs alone are not going to make US manufacturing very economically attractive from the start.

These new facilities that are supposedly being built require a lot of capital, skilled labor, and approvals, and that takes years. That's not something that happens overnight.

I'm not sure this onshoring reduction plan will impact as many people as quickly as expected, because companies may not be able to get their onshoring plans in place in time to qualify for the lower tariff amount the administration wants.