President Donald Trump has signed an executive order that could impose tariffs of up to 100 percent on some patented drugs if pharmaceutical companies fail to reach deals with his administration, according to Al Jazeera. The order. Issued on Thursday. Outlines the potential tariffs as a means to push for pricing agreements and increased domestic manufacturing in the United States.

Details of the Executive Order

Under the executive order. Companies that have signed a ‘most favoured nation’ pricing deal and are actively building facilities in the U.S. will face zero-percent tariffs. For those without a pricing deal but actively building such projects, a 20 percent tariff will apply, but it will increase to 100 percent in four years. A senior administration official told reporters that companies still have months to negotiate before the tariffs take effect, with larger companies given 120 days and smaller companies 180 days.

The official. Speaking on condition of anonymity before the order was issued, did not identify any companies or drugs that could be affected by the increased tariffs — However, the administration has already reached 17 pricing deals with major drugmakers, with 13 of them signed. Trump wrote in the executive order that he deemed the tariffs necessary to ‘address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients.’

Reactions and Concerns

Critics, pharmaceutical leaders, and medical groups have raised concerns about the potential consequences of the new tariffs. Stephen J Ubl. CEO of the pharmaceutical company trade group PhRMA, warned that the taxes on advanced medicines could increase costs and jeopardize billions in U.S. investments. He noted that America already has a large footprint in biopharmaceutical manufacturing and that medicines sourced from other countries ‘overwhelmingly come from reliable U.S. allies.’

Trump has imposed a series of new import taxes on U.S. trading partners since the start of his second term, repeatedly pledging high levies on foreign-made drugs. However, the administration has also used the threat of new levies to strike deals with major companies like Pfizer, Eli Lilly, and Bristol Myers Squibb, with promises of lower prices for new drugs.

Trade Frameworks and Exemptions

Beyond company-specific rates, a handful of countries have reached trade frameworks with the U.S. to further cap tariffs on drugs sent to the U.S. The European Union, Japan, Korea, and Switzerland will see a 15 percent U.S. tariff on patented pharmaceuticals, matching previously agreed rates for most goods. Meanwhile, the United Kingdom will get a 10 percent tariff, which the order noted would ‘then reduce to zero’ under future trade agreements. The UK previously secured a zero-percent tariff rate for all British medicines exported to the U.S. for at least three years.

Drugmakers who enter pricing agreements with the White House and onshore drug production will be exempt from the tariffs. Companies that plan to increase their domestic manufacturing will see a 20 percent tariff that will increase to 100 percent in four years. The U.S. has already agreed to exemptions for 17 drugmakers, with four still being negotiated. Large companies that have signed deals, which exempt them from tariffs for three years, include Pfizer and Eli Lilly, among others.

The executive order risks creating an ‘unfair two-tiered system of exemptions’ benefiting only big companies that have already made most-favoured-nation deals with Trump, said the Midsized Biotech Alliance of America (MBAA), an industry group. Alanna Temme, MBAA’s president, stated in a statement that mid-sized drugmakers ‘lack diversified portfolios to absorb these sudden cost increases.’

Trump has been pressuring drugmakers through his most-favoured-nation drug pricing policy to lower prices to what people pay in other high-income countries. U.S. patients by far pay the most for prescription medicines, often nearly triple what patients pay in other developed nations. The announcement also comes as the White House faces pressure from consumers to lower prices amid other tariff-related price increases, as well as high gas prices triggered by the U.S.-Israel war with Iran.

In January, Trump laid out a range of economic policies meant to address the rising cost of living, which he has attributed to the Biden administration. Trump proposed banning large institutional investors from buying single-family homes and capping credit card interest rates at 10 percent. When discussing policies affecting drug prices, Trump said at the time that ‘on that alone, we should win the midterms.’