The United States federal government is currently preparing to slap a 25 percent tariff on prescription drugs made in Canada. This change would dramatically increase expense and unnerve supply chains. Those costs will ultimately be borne by American buyers—experts project implementing the tariffs by as soon as April 2 could cost American buyers upwards of $750 million. This action will further cause shortages of many essential medications.
Americans would be the ones to pay the cost of these harmful tariffs. The long-term implications would be very bad for Canadian patients. Tariffs would lead to critical bottlenecks, potentially cutting off access to the life-saving drugs that Canada has the capacity to produce.
Financial Ramifications
A 25 percent tariff on Canadian pharmaceuticals would be a big new cost on U.S. consumers. It would put an unsustainable burden on healthcare providers throughout the nation. These increased costs may flow down the entire supply chain, ultimately harming pharmacies and patients as well.
Canada currently manufactures about $3 billion in active pharmaceutical ingredients and finished pharmaceuticals for the US market annually. That’s a huge number, this is only 1.9 percent of all drugs sold in the U.S. Though small in percentage, the potential economic impact is huge.
“These drugs are vital to Americans, but they’re also importantly shipped from Canada. And so these tariffs might have implications in the future on the supply chain and how Americans get these specific drugs.” – Mina Tadrous
Tariffs add unnecessary risk for other critical pharma Tariffs impose an excessive penalty on all goods, including critical pharmaceuticals. Bupropion, used to treat major depressive disorder, and ibalizumab, used for multi-drug-resistant HIV, are especially noteworthy. The implications would be catastrophic—in particular for patients who need these life-saving medicines.
Potential Drug Shortages
The tariffs are a serious threat to the stability of supply for essential medications in the U.S. and Canada. Those at greatest risk include intravenous (IV) drugs and other sterile products employed in hospital environments.
Drugs developed for extremely small populations aren’t safe either. For example, sotalol, an important alternative to other antiarrhythmic agents that is used to manage life-threatening heart rhythm problems, could become unavailable. With tariffs now disrupting the entire supply chain, both countries stand to experience an increase in neglected medical needs.
“Shortages do not pay attention to borders when these supply chains are global.” – Mina Tadrous
The urgency of this situation is hard to overstate. Once tariffs take effect, patients and incorporated pharmacists may start experiencing their negative impact in just a few weeks. The worry is more than just short-term gaps. Employment impacts in the long run may be even more severe as it requires a large lead time to develop manufacturing capacity.
Broader Supply Chain Implications
The potential introduction of tariffs on pharmaceuticals could have even wider impacts, undermining both international trade norms and American healthcare quality. Since most drugs use ingredients made from different countries, adding tariffs makes a complex supply chain even more complicated.
“For a drug to end up on our shelves here in Canada, it probably has components from five different countries. And so you can imagine if we’re starting to put tariffs on each other and counter-tariffing, that becomes very challenging to navigate.” – Mina Tadrous
It gets even worse as new tariffs are slapped on Canadian goods almost daily. This would apply to products made in Europe and Asia, increasing the potential for a more tightened supply chain. This new ripple effect would make it even more difficult for medication patients depend on from reaching them when they need it.
“If [tariffs] are enacted on pharmaceuticals, then we need to, as Canadians, start thinking about actions to preserve and protect our supply chain, even more than we’ve been doing now.” – Mina Tadrous
The threat of these exact tariffs erodes patient care quality and that’s an understatement. Though these crises might not appear in a headline-grabbing fashion, they could silently erode treatment access for our most vulnerable communities.
