President Donald Trump’s evolving tariff policies continue to surprise. After implementing a 10% tariff on most U.S. imports on April 5, the Trump administration is now eyeing the pharmaceutical sector.
On April 14, the Trump administration filed a federal notice revealing that on April 1, it had launched an investigation to assess whether imports of pharmaceuticals and their ingredients pose a risk to national security. This includes active pharmaceutical ingredients (APIs), finished drug products, medical countermeasures, and related products.
The Department of Commerce is inviting public comment and supporting data on the matter. The comment deadline is set for 21 days after publication in the Federal Register on April 16.
Behind the investigation lies Trump’s plan to impose tariffs on the $634 billion pharmaceutical sector, with the goal of bringing overseas production to the United States.
“We don’t make our own drugs anymore,” Trump said on Monday. “The drug companies are in Ireland, and they’re in lots of other places — China. And all I have to do is impose a tariff — the more, the faster they move in.”
When asked about the timeline, Trump simply responded “not too distant future,” adding, “We are doing this because we want to make our own drugs.”
While boosting domestic production should make sense, experts are worried that tariffs may not be the best path due to the staggering costs and years required to build domestic capacity, reports The New York Times.
According to Marta Wosińska, a senior fellow at the Brookings Institution, it takes three to five years to build a new manufacturing facility. This is due mainly to local permit challenges that vary drastically across locations, and the price can be more than a billion dollars.
Johnson & Johnson’s CEO warned that proposed tariffs could disrupt drug supply chains.
Image source: Richard Levine/Corbis via Getty
Trump signs directive to lower drug price and cut Medicare costs
Meanwhile, on April 15, President Trump issued another executive order aimed at lowering drug prices and reducing Medicare costs. Among the directives is a move to reverse a Biden-era initiative that enabled Medicare to negotiate drug prices, reports CNN Politics.
The new directive calls on Health and Human Services Secretary Robert F. Kennedy Jr. to explore how Medicare payments for drug administration, such as cancer treatments, can be made equal no matter where patients receive care.
Related: Have stocks reached their tariff selloff bottom? Investors just aren’t sure.
While the order most likely won’t have an immediate effect, it is a step in that direction. The White House affirmed that Congress needs to act on several provisions.
Johnson & Johnson responds to possible tariffs as it reports earnings
On April 15, pharmaceutical giant Johnson & Johnson (JNJ) reported first-quarter 2025 earnings, revealing sales of $21.89 billion, up 2.4% from the same period of 2024. This surpassed analysts’ expectations of $21.56 billion, driven by strong cancer drug sales. Net earnings amounted to $11 billion, compared to $3.3 billion a year ago.
The healthcare company updated its 2025 guidance, raising sales projections by $700 million to reflect the addition of schizophrenia drug Caplyta following completion of the Intra-Cellular $14.6 billion acquisition. Johnson & Johnson now expects operational sales growth for the full year in the range of 3.3% to 4.3% with a midpoint of $92 billion or 3.8%.
Following the report’s release, the company’s CFO Joe Wolk said in an interview on CNBC that Johnson & Johnson expects tariff costs of roughly $400 million this year. Wolk clarified that the profit outlook includes the $400 million expected to be incurred due to tariffs, mostly in the company’s medical device business.
Johnson & Johnson chairman and CEO Joaquin Duato cautioned that tariffs threaten the drug supply chain. “There’s a reason…why pharmaceutical tariffs are zero. It’s because tariffs can create disruptions in the supply chain leading to shortages,” Duato said during the company’s earnings call.
The CEO further suggested that the proper way to build manufacturing capacity in the U.S., both in MedTech and in pharmaceuticals, is “not tariffs, but tax policy. As a matter of fact, since President Trump’s 2017 tax reform, the investment in manufacturing both in MedTech and in pharmaceuticals has significantly increased.”
Wolk noted that Johnson & Johnson has more biopharmaceutical facilities in the U.S. than any other country in the world. In March, while breaking ground on a new $2.2 billion biologics plant in North Carolina, the company announced it will spend $55 billion in the U.S. over the next four years to build three new manufacturing sites and expand others.
Year-to-date, Johnson & Johnson’s stock is up 6.22%, trading at $153.62 per share.
