Strategic shift: Navigating tariffs, supply chains and reshoring realities

The life sciences industry is entering a pivotal period of transformation as the U.S. government implements new pharmaceutical tariffs aimed at strengthening domestic manufacturing. While the tariffs that took effect on April 8 did not impact pharmaceutical products, forthcoming measures are expected to target a broad range of industry components — including active pharmaceutical ingredients (APIs), branded drugs, generics, biologics and medical devices.

These policy changes are part of a broader shift in trade strategy, which includes a 10% baseline tariff on all imports, as well as reciprocal measures designed to address global trade imbalances. While the long-term goal is to bolster national self-sufficiency, the immediate effects are reverberating throughout the industry.

Immediate industry impacts

For pharmaceutical manufacturers, the introduction of tariffs brings significant operational and economic challenges.

• Increased costs: Tariffs on imported APIs, raw materials, and medical devices will drive up production costs. These increases may be passed down the value chain, potentially raising prices for patients and payers. As highlighted by the New York Times, the proposed tariffs would target high-value European exports such as Ozempic, cancer therapies and flu vaccines—medicines that currently command premium prices in the U.S. market and generate substantial profits for manufacturers.
• Reduced patient access: Cost pressures could make generics and other low-margin therapies less viable, diminishing availability in already underserved markets. These pressures can also lead to FDA-declared drug shortages, where limited supply status allows compound pharmacies to step in. This can introduce new competitive and regulatory complexities across the market.
• Retaliatory measures: Global partners may impose their own tariffs or limit cooperation in areas like clinical research, complicating clinical trials and supply agreements. Compounding these challenges is a growing threat of export restrictions on scarce raw materials critical to manufacturing, placing additional strain on already fragile global supply chains.
• Market volatility: