The Trump administration’s obsession with pharmaceutical tariffs did not happen overnight.

As early as 2020, during his first term, Trump proposed a "most-favored-nation" (MFN) pricing model, seeking to link U.S. Medicare drug prices to the lowest international prices. However, the plan faced fierce resistance from the pharmaceutical industry and ultimately collapsed due to legal challenges.

Back then, tariff threats were more like "crying wolf." While pharmaceutical companies were nervous, they did not feel real pain.

The real turning point came in 2025. In September of that year, Trump issued an ultimatum on the social media platform Truth Social: starting October 1, the U.S. would impose a 100% tariff on all branded or patented drugs—unless the company was breaking ground and building a manufacturing facility in the U.S.

This pressure campaign was no longer a indiscriminate attack targeting China or any single nation; instead, it turned tariffs into a sword of Damocles hanging over every multinational pharmaceutical company. According to incomplete statistics, in 2025 alone, at least 14 large pharmaceutical companies pledged massive investments in the U.S. for R&D or factory construction.

The White House’s goal extends beyond just building factories—it demands tangible price cuts.

In July 2025, Trump sent letters to 17 major pharmaceutical companies, demanding they implement MFN drug pricing by September 29. In the end, 14 companies "surrendered." Not only did they commit to price reductions, but they also donated large quantities of active pharmaceutical ingredients (APIs) for the national strategic reserve—BMS donated 7 tons of the active ingredient for its anticoagulant Eliquis, while GSK donated six months’ worth of raw materials for respiratory inhalers.

However, this tariff gambit has not been smooth sailing.

In February this year, the U.S. Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs, overturning Trump’s sweeping tariffs on goods from multiple countries imposed under the Act.

In the majority opinion, Chief Justice John Roberts noted that Article I of the Constitution grants Congress the power to tax, and the phrase "regulate imports" in the IEEPA does not include the authority to levy tariffs.

Despite this, tariff threats against the pharmaceutical sector have not been lifted. Pharmaceutical tariffs are grounded in Section 232 of the Trade Expansion Act of 1962, which grants the president authority to adjust imports when imported products are deemed to threaten "national security".

The Supreme Court’s ruling did not affect the validity of Section 232, meaning pharmaceutical tariffs justified on national security grounds remain enforceable. The new round of tariff plans revealed by Bloomberg on April 2 is precisely based on this legal foundation.

On the surface, Trump’s tariff stick is aimed at forcing manufacturing reshoring and lowering drug prices. However, some industry insiders believe the underlying consideration is to exclude China from the core supply chain of global innovative drugs.

A report by BOCOM International points out that the tariff policy rolled out by the U.S. in September 2025 has a clear "target": it mainly targets branded drugs or patented finished pharmaceuticals and formulations, while generics, biosimilars, and active pharmaceutical ingredients (APIs) are explicitly excluded.

In other words, for the U.S. domestic generic drug supply chain, exempting APIs means temporarily avoiding inflationary pressure; from China’s perspective, this is a form of "selective decoupling".

For a long time, China’s pharmaceutical exports to the U.S. have been dominated by APIs. In 2025, China’s total exports of pharmaceutical and health products reached $111.341 billion, of which Western medicine raw materials accounted for $42.867 billion—over three-quarters of the total. Since APIs are excluded from the tariff list, the direct impact on Chinese pharmaceutical companies remains controllable in the short term. But this by no means means they can rest easy.

What truly alarms China’s innovative drug sector is the industrial chain relocation behind the policy.

An industry insider told Tongxieyi in an interview that the core of Trump’s policy is to push pharmaceutical companies to invest and build factories in the U.S., create jobs, keep tax revenue in America, and ultimately reduce BD (Business Development) cooperation with Chinese firms. If all products are manufactured in the U.S., R&D activities will naturally gradually return as well.

It can be said that U.S. pharmaceutical tariffs are merely the driving force; the ultimate goal is to build a "de-Sinicized" closed-loop ecosystem.

With all major multinational pharmaceutical companies named having bowed down, the 2026 new tariffs will target more precisely—likely at companies that have not yet established deep ties with the U.S., as well as market participants reliant on imported finished drugs.

While the direct impact of tariffs on Chinese pharmaceutical companies is limited, vigilance is still needed. Very few Chinese companies have the capability to build factories in the U.S. The core intent of Trump’s policy is to push pharmaceutical firms to invest and build factories in the U.S., create jobs, and ultimately reduce cooperation with China—if all products are made in the U.S., R&D will naturally follow.

However, will things really go as Trump wishes?

The U.S. drug pricing system is undergoing a profound transformation.

From "crying wolf" to tangible progress, the Trump administration’s MFN drug pricing policy marks an accelerating convergence of U.S. drug prices with overseas markets.

For China, this presents both challenges and an opportunity for transformation. Over the past few years, China’s innovative drugs have made remarkable progress in oncology, autoimmunity, small nucleic acids, and other fields. The start of 2026 has already seen multiple blockbuster BD transactions. However, fluctuations in Sino-U.S. relations have introduced uncertainty to this "borrowing a boat to sail the seas" model.

A growing consensus is clear: relying solely on BD licensing and entrusting overseas markets entirely to collaborations with multinational giants is no longer secure.

Future trends may hinge on the interplay of two variables. First, whether Trump can truly deliver on his promise to make U.S. drug prices the lowest among developed nations. If price-cutting effects fall short of expectations, the policy could face greater implementation resistance. Second, the "internal strength" of China’s innovative drug companies. Those with differentiated technologies that address unmet clinical needs will retain bargaining power even in the face of trade barriers.

It is foreseeable that the global expansion path for China’s innovative drug companies will require greater prudence, wisdom, and strategic resilience than ever before.