29 Sept 2025
The Trump administration has announced a new wave of tariffs, including a 100% levy on pharmaceuticals and specific manufactured goods, set to take effect from October 1st. These measures, justified under national security and trade expansion acts, aim to reduce reliance on foreign production but are expected to significantly impact global supply chains, consumer prices, and upcoming inflation data.
The Trump administration announced a new wave of tariffs, including a 100% levy on pharmaceuticals, heavy trucks, and home furnishings like furniture, set to commence from October 1st. Additional tariffs include 25% on heavy truck imports, 50% on bathroom cabinets and sinks, and 30% on upholstered furniture imports, with some taking effect from the following Wednesday.
Companies establishing or already operating manufacturing facilities within the United States for drugs or other goods subject to tariffs are exempt. These measures align with Trump's ongoing protectionist trade policies, which he continues to pursue despite judicial challenges.
Patented pharmaceuticals could see their average US price increase by up to 3.3%, although this might be somewhat mitigated by exemptions for companies building local factories. The tariffs are expected to double import costs for some high-selling products, directly translating to higher expenses for consumers, particularly those suffering from chronic illnesses.
Many popular US-consumed drugs, including Ozempic (from Denmark), Mounjaro (first production phase in Ireland), and critical autoimmune, cancer, and hemophilia treatments (from Switzerland, Denmark, Ireland, Japan), are heavily reliant on foreign production. Singapore, Switzerland, and the United Kingdom are among the countries most vulnerable to these new pharmaceutical tariffs.
Major pharmaceutical companies like AstraZeneca, Merck, and Johnson & Johnson have invested billions in increasing US production since Trump's previous threats, which could lessen the tariffs' impact. However, smaller companies or those that have not yet initiated domestic expansion projects remain susceptible to significant disruption.
The administration employs Section 232 of the Trade Expansion Act, which allows the President to impose tariffs without Congressional approval if imports threaten national security, a precedent previously set for steel, aluminum, and auto imports. The International Emergency Economic Powers Act (IEEPA) is also utilized for these sector-specific tariffs, making them potentially more durable than country-level tariffs.
Investigations are underway regarding imports of robotics, traditional machinery, and medical equipment, with announcements expected in the coming weeks for additional tariffs on semiconductors and minerals. The administration aims to reduce US dependence on foreign semiconductor production by encouraging companies to match their overseas chip manufacturing capacity domestically.
The Supreme Court has agreed to review challenges against these tariffs, even though two lower courts had previously deemed them illegal. This indicates ongoing legal scrutiny of the administration's trade practices.
Before the new tariffs, the Trump administration had issued an executive order attempting to align US drug prices with the lowest prices paid internationally. This initiative, which included requests for voluntary price reductions from 17 major pharmaceutical companies and threats of regulatory action, was largely resisted by the industry.
The core Personal Consumption Expenditures (PCE) data for August, the Federal Reserve's preferred inflation gauge, is due for release, with economists anticipating a slight moderation compared to July, though tariff impacts are still expected to be felt. Analysis of August's Consumer Price Index (CPI) indicated a significant, unusual increase in commodity prices. While differences exist between CPI and PCE calculation methods, rising commodity prices have been a general trend throughout the year, with some analysts predicting peak price pressures as late as 2026 due to future tariff influences.
Given the significant foreign dependency of important US-consumed drugs from countries like Ireland, Switzerland, Singapore, and Japan, these tariffs are poised to severely impact consumers through increased costs.
| Policy Area | Key Measure | Impact/Rationale |
|---|---|---|
| Tariffs on Goods | 100% tariffs on pharmaceuticals, heavy trucks, and furniture. | Effective October 1st, aiming to boost domestic production. Exemptions apply for companies building or operating factories in the US. |
| Additional Tariffs | 25% on heavy truck imports, 50% on bathroom cabinets, 30% on upholstered furniture. | Further expansion of protectionist measures across various sectors, taking effect from next Wednesday for some categories. |
| Pharmaceutical Price & Supply | Potential 3.3% average price increase for patented drugs. | Likely higher consumer costs, especially for vital drugs (e.g., Ozempic from Denmark, Mounjaro from Ireland, cancer/autoimmune drugs from Switzerland/Ireland). |
| Global Impact | Singapore, Switzerland, UK, Mexico, and Canada are among the most affected nations. | Disruption to established supply chains and trade relationships due to targeted tariffs on key export sectors. |
| Legal Framework | Utilization of Section 232 (national security) and the International Emergency Economic Powers Act (IEEPA). | Allows the President to impose tariffs without direct Congressional approval; gives sector-specific tariffs more durability. |
| Future Tariffs & Industry Focus | Upcoming tariffs on semiconductors, minerals, robotics, and medical equipment. | Aims to reduce foreign dependency and encourage domestic production across critical high-tech and industrial sectors. |
| Drug Price Control Attempts | Previous executive orders sought to align US drug prices with the lowest foreign prices. | Met with resistance from pharmaceutical companies, who refused voluntary price reductions, leading to new tariff actions. |
| Inflation & Economic Data | Anticipated release of core PCE data (Fed's preferred gauge). | Economists expect moderation but anticipate tariff impacts; commodity inflation was notably high in recent CPI, with peak price pressure predicted for 2026 due to tariffs. |
