No sector 'will escape unscathed' even with tariff exemptions
Stephen Ezell, Information Technology & Innovation Foundation (ITIF) vice president of global innovation policy, joins Catalysts to discuss how tariffs can impact the pharmaceutical industry despite the exemption.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
We're going to produce the cars and ships, chips, airplanes, minerals and medicines that we need right here in America. The pharmaceutical companies are going to become roaring back, they're coming roaring back. They're all coming back to our country, because if they don't, they got a big tax to pay.
President Trump granting pharmaceuticals an exemption to his hefty reciprocal tariffs alongside semiconductors, lumber, copper, and some minerals, but the industry is already bracing for that to change with Denmark's benchmark index entering into a bare market amid concerns about Ozempic maker Novo Nordisk and potentially some tit-for-tat there. I want to bring in Steven Esell. He is Information Technology and Innovation Foundation's VP for global innovation policy. Stephen, great to have you here. Pharma, somewhat safe for now, where, where's it heading in your view?
Yes, pharmaceuticals were exempted today. However, we have been continually led by the Trump administration to expect that the drug industry will see tariffs at some point in the future. There is word out that the administration may open a section 232 investigation into pharmaceutical imports in the United States. Section 232 investigations are opened under national security grounds. Uh, so while the industry is out of the woods for the moment, we may see tariffs in the future. It should also be noted as your viewers see today that while the pharmaceutical industry won't experience tariffs directly, there is no industry business or citizens that will escape unscathed from these tariffs today. Uh, in particular, these tariffs are going to make drug innovation and drug manufacturing in the United States more expensive. If you think about it to innovate drugs, we have to have very sophisticated equipment like gene sequencers or scanning electron microscopes. To manufacture drugs, we have to have vacuum pumps and biosafety cabinets. These inputs and components come from suppliers all over the world. So, even though the pharmaceutical product will be not exposed to the tariff, all these inputs and components will, and that's going to make US pharmaceutical manufacturing going forward less globally competitive.
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