Pharmaceutical companies across the United States are facing mounting pressure from three distinct tariff tracks that are reshaping how the industry plans its domestic manufacturing footprint.
The second episode of the Supply Chain Signal podcast features pharmaceutical supply chain expert Thanigavelan Jambulingam, PhD, who breaks down the key deadlines and their implications for reshoring.
The first tariff track took effect on July 31, targeting 17 manufacturers named in the White House’s April 2nd proclamation, including Eli Lilly (LLY), Pfizer (PFE), and Novo Nordisk (NVO).
Under the structure, companies face a default 100% duty, which drops to 20% if a Department of Commerce-approved onshoring plan is submitted and in place.
The duty reaches zero if that onshoring plan is paired with a Most Favored Nation pricing agreement with the Department of Health and Human Services, running through January 2029.
Jambulingam says the policy’s primary aim is supply chain resilience and predictability, but noted that manufacturing facilities represent a four-to-seven-year capital commitment that some companies are unlikely to make on the strength of a single policy.
He says some companies will pursue price concessions first and wait to see whether the political and economic conditions hold before committing to longer-term investment, pointing to FactSet data showing more than half of many top pharma companies’ revenue already comes from the US market.
A second wave of Section 232 duties is set to hit mid-size and smaller manufacturers on September 29th, the result of a longer compliance runway compared to the 120 days given to larger Annex III companies.
Jambulingam says these companies face a harder set of trade-offs than their larger counterparts because they are more resource-constrained, often weighing a dollar spent on new drug development against a dollar spent on manufacturing investment.
He notes smaller, publicly held companies also answer directly to shareholder value expectations, making it more difficult for them to justify onshoring commitments and more likely they lean toward pursuing price concessions instead.
A third tariff track concerns a generics-specific plan floated by President Trump in a July 21st Truth Social post, which has not yet been written into formal policy.
The generics segment of the market represents a particularly sensitive pressure point, as manufacturers in that space typically operate on tighter margins than branded pharmaceutical companies.
The combination of all three deadlines creates a complex environment in which companies of very different sizes and resources must navigate overlapping regulatory and financial pressures simultaneously.
Analysts and industry observers will be watching closely to see whether the incentive structure embedded in the Section 232 framework is sufficient to drive genuine long-term investment or simply encourages short-term price negotiation strategies.