President Donald Trump’s order imposing 100% tariffs on certain patented pharmaceutical products and ingredients took effect on Tuesday, as experts warned the burden would fall hardest on smaller drugmakers least able to move production to the United States.
The levies could force these companies to close or merge with larger rivals, reducing the number of medications available to patients and leading to higher prices, experts told CNN. Some also warned the tariffs could slow the discovery of new medicines because smaller firms tend to be more innovative.
The tariffs, announced in April, ended decades of exemption under an international agreement designed to keep essential medicines flowing across borders. But many provisions limit their impact: large drugmakers that signed “Most Favored Nation” agreements, promising more domestic production and lower prices for Medicaid and the TrumpRx clearinghouse, are exempt, as are most generics, orphan drugs and certain specialty medicines. Products from the European Union, Switzerland, Japan and South Korea face 15% tariffs, British products are exempt, and companies with agreements to produce more in the United States face 20%.
More than 100 drugmakers make at least one drug that is not exempt, according to a preliminary Brookings Institution analysis. A majority have no factories and use contract manufacturers, said Marta Wosinska, a senior fellow at Brookings, who described a “crazy level” of competition for U.S. manufacturing capacity. “Their pockets are not as deep,” she said, adding that many may have to sell to larger companies if they cannot negotiate deals with the White House.
The Biotechnology Innovation Organization warned the Commerce Department this month that “tariffs that punish U.S. innovators are counterproductive and risk slowing the investment and innovation needed to be successful.” Its chief executive, John Crowley, wrote that tariffs “will raise costs, impede domestic manufacturing, and divert scarce resources away from research and development.”
Patients with conditions not treated by major manufacturers could feel the biggest impact because they often depend on smaller companies, said Mollie Sitkowski, a trade lawyer with Faegre Drinker, who expects prices to rise and fewer new drugs in coming years.
On Thursday, roughly 15,000 documented immigrants in New England lose full Medicaid coverage under cuts mandated by Congress, including refugees, asylum holders and some parolees and trafficking victims without green cards, many of whom fled war zones. Massachusetts expects about 7,300 people to lose MassHealth Standard benefits, and more than 8,000 in Connecticut, Maine, New Hampshire, Rhode Island and Vermont, officials said.
Pregnant and postpartum mothers and anyone under 21 are exempt; in Massachusetts, most people over 65 and those with disabilities keep comprehensive coverage, while other adults get emergency-only plans. The Centers for Medicare & Medicaid Services declined to answer questions, saying the new standards protect taxpayers and reduce the risk of abuse. Nationally, the restrictions cut nearly $1 trillion through 2034, including $6.2 billion in savings from immigrant rules that will add 100,000 people to the uninsured ranks, according to a KFF analysis.
Further changes from January, including work requirements and more frequent eligibility checks, are expected to cut Massachusetts’s insured population by between 200,000 and 300,000 by 2034. “All hospitals, especially those that are heavily reliant on Medicaid, are going to be threatened,” said Daniel McHale of the Massachusetts Health and Hospital Association. “I think this is just the tip of the iceberg,” said Shade Cronan, a spokeswoman for the Massachusetts League of Community Health Centers.
A 55-year-old Ukrainian parolee in a Boston suburb, who suffered two micro-strokes and recently lost the coverage paying for antidepressants, said: “Here, every day I cannot sleep now, I cannot have normal life.” Andrew Cohen, an attorney at Health Law Advocates, said: “This is going to make it much more difficult for people to survive.”
In Canada, Deloitte canada cut its 2027 economic growth forecast by 20%, to 1.6% from the 2% it projected in June, citing the fallout from the U.S. trade war. “For some, it’s a little bit like the Earth is moving under their feet — and not in a positive way,” chief economist Dawn Desjardins told CBC News.
On Tuesday, Washington banned American imports of Canadian alcohol, motorcycles, molasses and whey products, after adding more Canadian goods to a 50% tariff list this month. “We’re going to win everything,” Trump told reporters on Monday, touting a $15 billion Iowa steel plant as proof his tariff policy works, even as a U.S.-owned mill in Hamilton, Ontario, announced layoffs.
Statistics Canada said on Tuesday that GDP growth was flat in July, and its flash estimate sees 0.2% growth in August. CIBC economist Andrew Grantham called the July figure “old news” given the latest escalation. The Bank of Canada’s next interest rate decision is due on October 28, after the September jobs report on October 9 and inflation data on October 19.