The Canadian pharmaceutical industry is in a tizzy. This follows U.S. President Donald Trump calling for a huge 200 percent tariff on imported pharmaceuticals. Trump specifically proposed this kind of announcement just last week to address national security worries. Inflation Reduction Act aims to address America’s extreme and dangerous dependence on drugs made overseas. The president provided that drug manufacturers will have at least 12–18 months before the tariffs take effect. This new timeline provides them an opportunity to engage in good faith negotiations and make appropriate adjustments.
Most recently in April, Trump opened an investigation into the pharmaceutical industry. To do so, he invoked Section 232 of the Trade Expansion Act of 1962. This policy analysis examines the dangers posed by U.S. dependence on foreign-manufactured drugs. It particularly focuses on the problems with authorship from nations such as China and India. Few questions asked in Ottawa have the potential to be as consequential for Canada. Today, Canada only exports under five percent of all generic medicines sold in the U.S.
Implications for Canada
Jim Keon, president of the Canadian Generic Pharmaceutical Association, expressed that the minimal volume of Canadian exports should not raise alarms regarding U.S. overreliance on imports. He stressed that Canada is likely not Trump’s main focus for tariffs. As he added, the danger of Canada becoming “collateral damage” is much more likely should sweeping, indiscriminate tariffs on all steel and aluminum be introduced.
Keon noted that increasing tariffs would create more supply chain disruptions and costs associated with increased consumer prices. He stated, “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.”
Should Canada proceed with these widereaching pharmaceutical duties, the result would be disastrous. Both Canadian and foreign companies that manufacture drugs in Canada will be impacted. For some companies, it wouldn’t be viable for them to keep making those generic medicines only for Canadian consumers. Without access to the American market, this latter option becomes unrealistic for them.
Ongoing Negotiations and Future Prospects
In the face of these tariffs that seem certain to come, Ottawa and the Trump administration are responding. They’ve set themselves the ambitious target of July 21 to conclude a deal on global pharmaceutical trade. Keon expressed hope that the ongoing economic and security agreement negotiations between Canada and the United States will maintain a tariff-free environment for pharmaceuticals.
Keon urged stakeholders to be cautious, urging them not to overreact to Trump’s rhetoric. “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,” he noted.
The threat of new tariffs has impact not only north of the border but far outside Canadian Shores. Drugmakers are the ones sounding the alarm! They caution that these steps would lead to immediate shortages in the U.S. market and ultimately increase prices for Americans dependent on medication. Now industry leaders are doubling down on those stakes. They are helping to shape solutions to ensure national security is ensured, but not at the expense of access to critical pharmaceuticals.
