The US relies on China for key medicines. They won't be spared from tariffs

President Trump's tariffs in China are in place and hitting all products imported from the country — including a number of pharmaceutical drugs that Americans rely upon.

Chinese imports account for a significant proportion of U.S. prescriptions and over the counter drugs. Many of the Chinese-produced drugs are generics, which account for 91 percent of prescriptions dispensed in the U.S.

“The Chinese market is a key supplier for key starting materials and [Active Pharmaceutical Ingredient (API)] to the generic supply chain,” said John Murphy, president and CEO of the Association for Accessible Medicines (AAM).

“I will say they're sort of less important any longer for the actual finished fill and final manufacturing,” Murphy noted. “But really, it's the rare minerals, the key starting materials which are obviously critical to the supply chain.”

Stakeholders were hopeful that medications would be spared from tariffs. Some noted that the U.S. is a signatory to the World Trade Organization’s (WTO) 1994 Agreement on Trade in Pharmaceutical Products which calls for the elimination of tariffs on many pharmaceutical products. China has vowed to sue over the 10 percent tariffs, which it says are in violation of WTO rules.

But a White House official who spoke with The Hill said no exceptions are planned, and the administration will not be recognizing the WTO agreement.

U.S. relies on China

The country's dependence on China to maintain pharmaceutical supply chains has long been an issue that lawmakers on both sides of the aisle have sought to address.

In 2018, the U.S.-China Economic and Security Review Commission noted that the country was “heavily dependent” on drugs and API originating from China. A 2023 analysis from the Atlantic Council found that the value of Chinese-imported APIs has continued to grow in recent years.

According to Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, the U.S. isn’t unique in its dependence on China for drugs, noting that the European Union is similarly reliant.

De Bolle said China’s dominance in the market grew as it sought to enhance its drug producing capacity while U.S. pharmaceutical companies turned to other manufacturing pursuits.

“What happened is that we developed this huge biotech sector where we have a lot of stuff going on,” said de Bolle. “The manufacturing market just turned to producing these more sophisticated drugs; the stuff that's used in treatments, the stuff that's going through clinical trials.”

“That's why we went from, you know, producing a lot of these things to not producing many of these things and buying them from elsewhere. And elsewhere eventually became China,” she added.

Tariffs may cause shortages, industry exits

The margins for manufacturing generic drugs are razor-thin, and any disruptions to the supply chain are apt to cause shortages or delays.

“That additional 10 percent tariff is going to have a fairly significant impact on the cost of goods for the generic and by a similar supply chain,” said Murphy. “We don't hold massive stockpiles of generic drugs in the United States. It's a fairly just-in-time inventory.”

According to Murphy, some manufacturers may find it economically unviable to produce generic drugs, resulting in shortages.

Across all industries, analysts have warned that increased costs brought on by tariffs will be passed to consumers. But some manufacturers may instead drop out of the market entirely rather than pass on costs, partly due to a key provision in the Inflation Reduction Act (IRA).

As part of its cost-cutting measures, the IRA included a provision that requires drugmakers to pay Medicaid a rebate if the price of their drugs rises faster than the rate of inflation.

Tom Kraus, vice president of government relations at the American Society of Health-System Pharmacists, said incurring that penalty on top of tariffs could mean more than just shortages.

“You've got to sort of factor in paying that penalty, which is going to make you less profitable or you're going to have to drop out of the market,” said Kraus.

He noted that group purchasing organizations, companies that help hospitals and pharmacies buy drugs and save money, may decide that manufacturers whose products originate from China are too expensive and turn away from them entirely.

Eyes turn to India

India is also a global powerhouse when it comes to API manufacturing. An analysis by the United States Pharmacopeia (USP) found that India in 2023 had 50 percent of API drug master files (DMF), which are documents submitted to the Food and Drug Administration detailing the API manufacturing process.

While India has a slightly larger share of DMFs, China has gained more footing after increasing its share of DMFs by 63 percent between 2021 and 2023. While not all drugs use APIs that reference DMFs, they can indicate where API manufacturing is trending, USP noted.

But switching from China to India for sourcing is not something that can happen overnight.

“There's plenty of this capacity in India, there's plenty of this capacity in in the European Union and even Canada. I think that the problem is there is an excess capacity,” said Murphy. “You still are in a situation where it's going to take some time to scale up additional surge capacity in any one of these places in order to meet the global demand.”

Not only is there the matter of time but Indian manufacturers don’t have the exact same capabilities as those in China.

“India does not make the range of stuff that China makes,” de Bolle said. "You can rely on India for some of the over-the-counter medications, you can rely on India for active ingredients that go into vaccines, you can rely on India for antibiotics to a degree.

“When you get into ... the rest of it, then it becomes way more complicated," she added. "And China is pretty much the only market out there."

Topics

Chiefs vs. Eagles key matchups, odds, pick, where to watch, time, TV channel, live stream for 2025 Super Bowl

Breaking down Super Bowl 59
CBS Sports - 19m
This week, Trump shut down USAID. Here’s why China is cheering.

The U.S. decision to shut down USAID has been widely criticized as a strategic victory for China, allowing it to expand its economic and political dominance unchecked.
The Hill - 1h
How Trump’s tariffs could impact the price of gold

Tariffs aren’t necessarily bullish for the yellow metal.
MarketWatch - 1h
Ready for Chiefs-Eagles? Let’s prep for Super Bowl LIX with picks, matchups, keys and team breakdowns

We have you covered with everything you need to know for Sunday's game, including X factors, bold predictions, betting notes and MVP candidates.
ESPN - 1h
Cheaper e-bikes set for UK - but China tariff axe is 'kick in teeth for British firms'

British makers of e-bikes are worried after the government scraps tariffs on Chinese e-bikes .
BBC News - 1h
Rescuers search for some 30 people after a landslide in southwest China

Chinese rescuers are searching for some 30 people after a landslide in southwestern Sichuan province buried 10 houses The Ministry of Emergency Management deployed hundreds of rescuers including ...
ABC News - 1h
At least 30 missing after China landslide

Hundreds of emergency workers are searching for survivors, officials say, in Jinping village, Sichuan province.
BBC News - 1h
China’s economic miracle appears to be in the past. Here’s why the future looks bleaker and bleaker.

Weak consumption, an aging population and an exodus of personal wealth from the country put China on a perilous path.
MarketWatch - 2h
Temu and Shein Raised Prices, Removed Products as Trump’s China Tariffs Went Into Effect

Sellers and shoppers on the two sites say they saw items disappear and prices go up after President Donald Trump implemented tariffs on Chinese imports.
Wired - 3h
How Trump’s Tariff Threats Tore the U.S.-Canada Bond

Patriotic sentiment is bursting in Canada after President Trump’s threat to apply hefty tariffs and even annex the country. The damage to the two nations’ relationship could be lasting.
The New York Times - 4h
Trump pauses tariffs on low-cost parcels in US-China trade reprieve

Repeal of ‘de minimis’ exemption had sparked turmoil at US customs and postal service as shipments piled up
Financial Times - 7h
How Japan sparked Trump's 40-year love affair with tariffs

As a young real estate developer in New York, Trump said a rising Japan was ripping off the US.
BBC News - 13h
Trump Says He Will Announce Reciprocal Tariffs Next Week

The president said he planned to impose tariffs on countries that tax U.S. products. He also paused an action against China, allowing its low-cost products to again enter the U.S. tariff free.
The New York Times - 14h
Trump touches on tariffs, DOGE and Jan. 6 investigators in press conference

NBC News' Yamiche Alcindor reports on what President Trump discussed in his wide-ranging press conference with the prime minister of Japan. Reporters questioned the president on DOGE's actions, ...
NBC News - 17h
Trump delays cancellation of de minimis trade exemption targeting China imports

President Donald Trump signed an executive order on Friday that puts a pause on his closing of the de minimis trade exemption.
CNBC - 19h
Trump meets with Japanese prime minister as tariff threat looms large

Donald Trump is meeting with Japanese Prime Minister Shigeru Ishiba in a high-stakes visit for a key ally that depends on the United States for security and trade.
ABC News - 19h
EU to offer lower tariffs on US cars

Bloc hopes olive branch will help to shield Europe’s ailing car industry from Donald Trump’s trade measures
Financial Times - 20h
USAID Turmoil Threatens Key Aid Supplies to Gaza, Officials Say

Washington has funded roughly a third of the aid sent to the enclave since the war began. With most agency workers set to be put on leave, officials say that those supplies are under threat.
The New York Times - 23h
Trump, the Panama Canal and China’s Role: What We Know

The canal’s two biggest ports are operated by a Hong Kong company with global reach. The Trump administration sees a Chinese threat to U.S. security.
The New York Times - 1d
The US Government Is Not a Startup

Elon Musk and DOGE are moving fast and breaking things that can’t afford to be broken.
Wired - 1d
US aid cutoff poses new challenges to rights groups in Russia and Belarus

Rights groups, activists and independent media in Russia and Belarus endured increased government scrutiny, repressive laws and even were shut down and forced to operate from exile abroad
ABC News - 1d
Elon Musk vs The US Government

Musk says "it's now or never" for his revolution
BBC News - 1d
The Founder’s Leap Relies on 2 Things

Given the time and money involved with startups, nail down your “why” and know yourself.
Inc. - 1d
Take-Two CEO bullish on his games but wary on tariffs | Strauss Zelnick

Strauss Zelnick, CEO of Take-Two Interactive Software, talked about the latest plans the triple-A game publisher has with its upcoming titles and his view of possible tariffs on game consoles. I ...
VentureBeat - 1d
House lawmakers push to ban AI app DeepSeek from US government devices

Lawmakers in the House are proposing to ban the Chinese artificial intelligence app DeepSeek from U.S. government devices
ABC News - 1d
Racial gap widened in deaths among US moms around the time of childbirth

Black women in the U.S. died at a rate nearly 3.5 times higher than white women around the time of childbirth in 2023
ABC News - 2d
Tariff Uncertainty Taxes the Auto Industry

For some in the car industry, the uncertainty surrounding a US-border trade war is almost worse than the tariffs themselves. If the tariffs go through, the costs might get passed down to buyers.
Wired - 2d
Blake Lively is sued by Texas crisis specialist in latest 'It Ends With Us' lawsuit

A Texas crisis communications specialist has sued Blake Lively for defamation
ABC News - 2d
Second type of bird flu detected in US dairy cows

Dairy cattle in Nevada have been infected with a new type of bird flu that's different from the version that has spread in herds since last year
ABC News - 2d
'A real fighter' - how Simeone's son emerged as key to Atletico

"He's a real fighter" - how Giuliano Simeone has become integral to his father's plans at Atletico Madrid.
BBC News - 7h
Trump delayed tariffs on low-cost packages from China

President Trump signed an executive order this week that temporarily prevents low-cost packages from China from being slapped with his new tariffs. The move delays the suspension of the de minimis ...
The Hill - 15h
What do Trump’s tariffs mean for US-China trade?

The US president hopes tariffs will help close the huge trade gap by potentially pressuring Beijing into a new deal. Donald Trump postponed his threat to tax all imports from Mexico and Canada ...
The Guardian - 20h
The US draws a 'red line' over including Hezbollah in Lebanon's government

A newly appointed U.S. envoy says she hopes Lebanese authorities are committed to making sure that the Hezbollah militant group is not a part of the new government in any form
ABC News - 1d
Patrick Mahomes and Jalen Hurts are showing us a new way to play

Neither quarterback posted particularly eye-catching passing numbers. But is that really the best or only measure of good QB play?
Yahoo Sports - 1d
Trump’s Tariff Plan Is Looking Potentially Disastrous for Inflation

Here’s why Trump’s opening tariff salvo will likely hurt U.S. consumers.
Inc. - 1d
Guatemala gives Rubio a second deportation deal for migrants being sent home from the US

Guatemalan President Bernardo Arévalo says his country will accept migrants from other countries who are being deported from the United States
ABC News - 2d
Miami Beach Uses Fake Reality Show to Discourage Spring Break

As part of its yearslong effort to curb raucous partying, the city created “Reality Check,” a video in which revelers break the rules and suffer the consequences.
The New York Times - 2d
US Shoppers Face Fees of Up to $50 or More to Get Packages From China

Consumers and small businesses are already feeling the impact of President Donald Trump’s new tariffs, which eliminated a key trade exemption for parcels worth less than $800.
Wired - 2d
Guatemala strikes deal with Rubio to accept migrants from other countries deported from the US

Guatemala’s president says his country will accept migrants from other countries being deported from the United States
ABC News - 2d