Canadian pharmaceutical industry alarmed after Trump hints at a 200 per cent tariff

National Observer

5 days ago

Canada likely isn't the main target of US President Donald Trump 's threat to impose a 200 per cent tariff on pharmaceutical imports, an industry representative said Wednesday — but his plan could still put parts of the Canadian sector in peril.
"Canada is not the target but we could get caught in the crossfire if there are broad-based tariffs on pharmaceuticals," said Canadian Generic Pharmaceutical Association president Jim Keon.
On Tuesday, Trump floated the idea of massive pharmaceutical tariffs but said he would give drug makers up to a year and a half before introducing the duties.
Trump launched an investigation under Section 232 of the Trade Expansion Act of 1962 into pharmaceuticals in April, claiming national security concerns linked to America's reliance on imported drugs. A lot of those imported drugs come from China and India.
A report on that investigation has not been released but Commerce Secretary Howard Lutnick told CNBC Tuesday that details about pharmaceutical duties would come out at the end of the month.
Generic medicines are used to fill about 90 per cent of all prescriptions in the United States. Canadian exports amount to less than five per cent of all generic medicines sold in the US, Keon said.
Such a low volume shouldn't trigger any US concerns about an overreliance on imports, Keon said.
He said there is hope that the economic and security agreement being negotiated between Canada and the United States will ensure pharmaceuticals remain tariff-free. Ottawa and the Trump administration have set a July 21 target to finalize the deal.
"We have learned over the last six to eight months not to overreact to the statements and wait and see what actually comes out in the executive order in the tariffs themselves," Keon said.
But if Canada is not spared from the looming pharmaceutical duties, Keon said, that would have impacts for Canadian and foreign companies that manufacture drugs in this country.
Generic pharmaceuticals have a low profit margin. Without access to the American market, Keon said, it might not be practical for some companies in Canada to continue producing certain generic medicines for the domestic market.
Drugmakers have said that tariffs on pharmaceuticals could also cause shortages in the United States and increase costs for Americans who need medicine.
"I think as a Canadian industry and as part of a global industry, we've been operating without tariffs for the last several decades and imposing tariffs is going to increase costs and complicate supply chains," Keon said.
Keon said there is support for the Trump administration launching separate studies looking for ways to reduce prices and make the US a more attractive market for drug manufacturing.
Certain measures like harmonizing regulatory standards with those of other countries would help reduce unnecessary costs, he said.