Diplomatic Fireworks Flare Over Pharmaceutical Tariffs Against China

Mutual dependency ups the trade-war ante.

(Photo by: BSIP/Universal Images Group via Getty Images)

As wild stock market swings seed volatility and vitriolic barbs between President Donald Trump and various world leaders, American drug and medical industries, consumers, and hospitals are caught in the seesawing chaos. The United States imported an estimated $210 billion worth of medicines in 2024, a very different dimension of dependency than flatscreen TVs or Chinese fireworks.

Diplomatic Fireworks

The diplomatic fireworks are indeed flying pell-mell, as high US tariffs on imports of generic drugs could potentially pummel millions of Americans with increased prices. Yet, sustaining them would also incentivize American drug makers to shift production to domestic manufacturing – precisely the goal President Trump expressed on Tuesday: “When they hear that, they will leave China. Most of their product is sold here, and they’re going to be opening up their plants all over the place in our country.”

The threat of US tariffs against the EU has led pharmaceutical companies to strategize how to relocate production. The president had previously said Chinese pharmaceuticals would be exempt from new levies, consistent with a longstanding World Trade Organization treaty. Still, a recent announcement of duties on imported Chinese drugs could disrupt global supply lines while dizzy-headed executives scramble to decide where jobs and production will be housed in that new landscape.

Chinese drugs imported to America increased exponentially during the Biden administration, from $2.1 billion in domestic sales of Chinese-manufactured pharmaceuticals in 2020 to $10.3 billion two years later. This dependency raises the specter of US vulnerability in times of conflict; America’s military depends on its potential rival for many of its drugs, as does the nation’s medical system at large. These include vital antibiotics, heart medicines (partly made from pig intestines, a secondary dependency on China), cancer treatments, and other staples valued at $193.62 million in 2022.

Big Pharma Anxieties

Global pharma shares are plunging because of uncertainty about tariffs and threats to the supplies of crucial ingredients woven into a Chinese-linked web of production, a supply-line kaleidoscope blurring the visibility of market impacts and, thus, economic predictors. Some companies have announced possible pivots to US production: Pfizer CEO Albert Bourla, Ph.D., indicated the company is well-positioned with a local manufacturing setup that would enable the company to bring additional resources into the US if the situation demands. Last week, Eli Lilly announced it would invest $27 billion to construct four new manufacturing plants in the US, which is expected to create more than 3,000 jobs.

Yet, when the posturing and tariff dust settles, the president’s reshuffling could benefit US national security. Rosemary Gibson, Senior Advisor at the Hastings Center and author of China Rx: Exposing the Risks of America’s Dependence on China for Medicine, has warned that medicines controlled by China pose national security perils. These include their potential use as strategic or tactical weapons, as well as threats to US military supply chains, combat readiness, and troop safety. In 2019, she cautioned that:

“Medicines should be treated as a strategic asset similar to oil and other energy supplies and agricultural commodities such as wheat and corn. The United States would cease to function within days if supplies of energy and food commodities were disrupted. The same is true of medicines.”

Tariffs Bad Medicine?

These dangers have dramatically increased since 2019. The US imports 75% of its essential medicines. India provides about half of all generic drugs to the United States, but it depends on China for about 80% of its active pharmaceutical ingredients (APIs). China supplies nearly 90% of the antibiotic APIs used in America, and over 500 generic drugs are dependent on production in a single identified API manufacturing country. This vulnerability has deepened rapidly. Proprietary data from Exiger reveal that “U.S. imports of pharmaceutical ingredients from China grew nearly 24% from 2020 to 2023.” The United States benefits from low prices enabled by cheap Chinese labor and grapples with poorly substandard or contaminated drug imports in the devil’s bargain.

These dependencies suggest Donald Trump is caught between a trade-war Scylla and a drug-disruption Charybdis in his current tariff dance with China. China needs America as a customer, and until the United States rebuilds domestic drug manufacturing capacity, it is wholly reliant on China for necessary drugs for its military and national healthcare system. The trade war highlights long-term vulnerabilities to pandemics, international conflicts, and natural disasters. These two superpowers have one another by the throat and must play nice.

Trump’s chief motivation in his current tariff posturing over Chinese drug imports appears to be bringing jobs and economic growth back home to roost. He holds an intriguing deck of tariff cards – America’s trade imbalance with China is enormous and has been growing for years. The US imports far more goods from China than vice versa, meaning tariffs have a disproportionate sting for the Red Dragon. Some economic observers claim China is weak due to massive public and private debt that depends on steady growth in national GDP to maintain economic stability. Meanwhile, the United States has been shedding jobs and losing exports for decades, so it has less risk in bringing home the manufacturing bacon.

Relying on potential economic or military adversaries for precious medicines is a dangerous prescription for any nation. Ingredient quality, regulatory oversight, and supply-side vulnerabilities exposed during the COVID-19 pandemic compound this sensitivity in bargaining position over tariffs. Many Americans howl at the threat to cheap drug prices, but long-term risks to national security could prove paramount, and President Trump’s import duties against China may be prescient. The question remains whether he can navigate the current trade-war waters without capsizing the American (or Chinese) Titanics in an international game of chicken.

(Originally published at Liberty Nation News.)