Can Eli Lilly Stock Withstand the Threat of President Trump's New Sweeping Tariffs?
President Trump has threatened to levy tariffs of up to 200% on pharmaceutical imports.
Lilly's margins could be negatively affected if the company absorbs the higher costs.
However, any effect on Lilly should only be temporary.
10 stocks we like better than Eli Lilly ›
The active ingredients of roughly 80% of prescription drugs sold in the U.S. are made in other countries. President Trump wants that to change.
Instead of a carrot-and-stick approach, the president plans to rely solely on a stick -- tariffs. Trump recently threatened to levy steep tariffs on all pharmaceutical imports to the United States.
As you might expect, the pharmaceutical industry doesn't like the idea. But can a top pharma stock such as Eli Lilly (NYSE: LLY) withstand the threat of Trump's new sweeping tariffs?
About the president's threatened pharmaceutical tariffs
First of all, firm details about Trump's pharmaceutical tariffs have not been released yet. However, the president said that tariffs on pharmaceutical imports will come "very soon." We do know, though, that Trump wants steep tariff levels. He said during a Cabinet meeting earlier this month, "They're going to be tariffs at [a] very high rate, like 200%."
Commerce Secretary Howard Lutnick provided further clarification in an interview with CNBC. He said that the details on pharmaceutical tariffs will be announced at the end of July. Lutnick noted that a Section 232 investigation related to pharmaceuticals and semiconductors will be completed at the end of this month. Once that investigation is finished, Trump will establish his tariff policies. Section 232 investigations are intended to assess the effect of imports on national security.
Trump doesn't plan for pharmaceutical tariffs to take effect immediately, though. He said, "We'll give them [drugmakers] a certain period of time to get their act together." He suggested that pharmaceutical companies would have "about a year, year and a half" to move manufacturing to the U.S. to avoid the tariffs.
How Lilly could be affected
Lilly CEO Dave Ricks addressed the issue of tariffs head-on in his company's first-quarter earnings call on May 1, 2025. Ricks stated, "We support the U.S. government's goals to increase domestic investment. However, we don't believe tariffs are the right mechanism." He suggested tax incentives as a better way to promote U.S. manufacturing of prescription drugs.
But Ricks acknowledged the possibility that pharmaceutical tariffs could be imposed. He predicted that they "would have a negative effect on Lilly and for our industry." Wall Street agrees with that view.
Analysts at Barclays wrote to investors, "A 200% tariff would inflate production costs, compress profit margins, and risk supply chain disruptions, leading to drug shortages and higher prices for U.S. consumers." UBS analysts agreed, stating that tariffs could significantly hurt drugmakers' margins on products manufactured outside the U.S.
Lilly has three options in light of the steep pharmaceutical tariffs Trump has threatened. The option the president hopes drugmakers take is to relocate manufacturing to the Unites States. Lilly is already planning to build up its U.S. operations so that it can supply all products sold in the U.S. entirely from U.S. manufacturing facilities. However, it's doubtful that the company will complete this effort within the 12 to 18 months Trump mentioned. UBS said in a note to investors that four to five years is more reasonable for relocating manufacturing operations.
The second option for Lilly is to pass higher prices along to customers. The Pharmaceutical Research and Manufacturers of America (PhRMA) estimates that a pharmaceutical import tariff of only 25% would increase prices by as much as 12.9%.
Lilly's third option is to absorb the higher costs. Pharmaceutical tariffs of up to 200% could hurt the company's margins considerably.
Evaluating the threat
Let's return to our original question: Can Eli Lilly withstand the threat of Trump's new sweeping tariffs? I think the answer is "yes," albeit with a major caveat. The devil is in the details. Lilly's ability to navigate high tariffs depends on exactly what the Trump administration plans to do.
Ricks said in Lilly's Q1 earnings call that tariffs would "have a transient effect for Lilly, but probably not a long-term one." I suspect he's right.
The company already manufactures many of the products it sells in the U.S. inside the country. Those products wouldn't be affected. As Ricks mentioned, Lilly is already boosting U.S. production, which will also help.
Finally, don't discount legal challenges to the president's tariffs. An argument could be made that pharmaceutical products made in Ireland, the primary overseas source for Lilly, don't present a national security threat to the U.S., since Ireland is a staunch ally.
Granted, Lilly could face a bumpy ride for a while. But I don't think the threat of tariffs undermines the long-term investment thesis for this top pharma stock.
Do the experts think Eli Lilly is a buy right now?
The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Eli Lilly make the list?
When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,058% vs. just 179% for the S&P — that is beating the market by 878.83%!*
Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!*
The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
Can Eli Lilly Stock Withstand the Threat of President Trump's New Sweeping Tariffs? was originally published by The Motley Fool
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
4 minutes ago
- Yahoo
CIBC Raises PT on Eldorado Gold Corporation (EGO) from $23 to $32; National Bank and BofA Maintain ‘Outperform' Rating
Eldorado Gold Corporation (NYSE:EGO) is included in our list of the . A golden nugget illuminated under direct lighting, hinting at the value of precious metals. While there's a mixed overall analyst sentiment on Eldorado Gold Corporation (NYSE:EGO), optimistic earnings expectations are driving confidence. On July 15, 2025, CIBC increased its price target on Eldorado Gold Corporation (NYSE:EGO) from $23 to $32, maintaining an 'Outperform' rating. The next day, National Bank also maintained its 'Outperform' rating; however, the analyst lowered their price target from $29.57 to $27.75. Previously, BofA also decreased its price target to $20.81 on July 7, maintaining an 'Outperform' rating, citing revised Q2 commodity pricing models. On the positive side, Zacks expressed optimism regarding the company's future, amid a consistent upward trend in earnings estimates. Analysts have projected an earnings per share (EPS) of $1.73 per share for FY25, matching last year's EPS. Accordingly, it has given a 'Buy' rating on Eldorado Gold Corporation (NYSE:EGO). Operating in Turkey, Canada, and Greece, Eldorado Gold Corporation (NYSE:EGO) produces gold, lead, and zinc. It is included in our list of the best gold stocks. While we acknowledge the potential of EGO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 11 Most Undervalued Cloud Stocks Under $10 According to Hedge Funds and 11 Best Mineral Stocks to Buy According to Hedge Funds. Disclosure: None. Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
4 minutes ago
- Yahoo
HPE Gets a Vote of Confidence: Deutsche Bank Sees Room to Run After Juniper Deal
Hewlett-Packard Enterprise Company (NYSE:HPE) is one of the . On July 23, Deutsche Bank analyst Matt Niknam raised the firm's price target on the stock to $26 from $21 and kept a 'Buy' rating on the shares. The firm is positive on the stock following the Juniper deal, reflecting on the anticipated benefits. According to Niknam, the stock's current valuation offers a promising risk/reward balance for investors. Hewlett Packard Enterprise Company (NYSE:HPE), an American multinational technology company, provides high-performance computing systems, AI software, and data storage solutions for running complex AI workloads. An investor in a suit representing the company, seated in front of a long table of global leaders discussing the company's investments. While we acknowledge the potential of HPE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure: None. Sign in to access your portfolio
Yahoo
4 minutes ago
- Yahoo
CIBC Raises PT on B2Gold Corp. (BTG); Maintains ‘Neutral' Rating
With strong billionaire interest, B2Gold Corp. (NYSE:BTG) is included in our list of the . A golden nugget illuminated under direct lighting, hinting at the value of precious metals. On July 14, 2025, B2Gold Corp. (NYSE:BTG) released a highly favorable Feasibility Study for its 100%-owned Gramalote gold project in Colombia. The study highlights a medium-scale open-pit mine with an 11-year expected life, projected to deliver 2.3 million ounces of gold at an average recovery rate of 95.7%. The annual production is expected at 227,000 ounces in the first five years with all-in sustaining costs of $985/oz, resulting in attractive economics. The after-tax NPV is projected at $941 million at $2,500/oz gold and up to $1.7 billion with spot prices of $3,300/oz. Thanks to strong government support, the completion of extensive drilling, and already-secured permits, the project's development ramp-up is progressing. Meanwhile, permit modifications are expected to take 12-18 months. Three days later, CIBC raised its price target on B2Gold Corp. (NYSE:BTG) from $3.60 to $4.00, maintaining a 'Neutral' rating. With strong fundamentals and cash flow potential, Gramalote is on its track to reshape BTG's growth trajectory. Operating mines in Mali, the Philippines, and Namibia, B2Gold Corp. (NYSE:BTG) is primarily focused on gold production. It is included in our list of the best gold stocks. While we acknowledge the potential of BTG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 14 Cheap Transportation Stocks to Buy According to Analysts and 10 Cheap Lithium Stocks to Buy According to Hedge Funds. Disclosure: None.