Source: Vox Newsletter February 5, 2025 - Author Dylan Scott, Senior Correspondent Global Health

 

Hi everyone! Sean Collins here. The US may have (at least temporarily) avoided a trade war with Canada and Mexico, but Trump’s tariffs on China are now in effect. And that could be very bad news for our medicine supply, Vox’s Dylan Scott explains.

The United States, despite being the richest country in the world and a biopharmaceutical powerhouse, has long struggled with drug shortages. These are usually accidental. A pandemic. A factory machine needs repair. Ingredients become tainted. But this time, President Donald Trump’s tariffs on China could be the cause.

That’s because China, which this week has been hit with a 10-percent across-the-board tariff, is the largest supplier of drugs and drug ingredients to the US. 

Generic drugmakers, which produce 90 percent of the prescription drugs in the US and often depend on Chinese chemical imports, don’t have easy recourse. It will be difficult for them to raise prices to make up for the additional tariff costs: The US has put rules in place to stop drugmakers from hiking their prices, because egregious costs have made medications unaffordable for too many Americans. 

In the absence of a global trade war, that’s sound cost control. But those rules weren’t made for a scenario in which the US places massive tariffs on its biggest trade partners.

Domestic drugmakers, which operate on tight margins “may not be able to absorb those tariffs,” Marta Wosińska, a senior fellow in economic studies at the Brookings Institution, told STAT News this week. They “may exit the market and this in turn could result in shortages because drug markets don’t easily rebound to shocks.”

Other companies are not likely to step in to fill the gap. Why would they when the original manufacturer already decided the business wasn’t economically viable?

In 2021, economists from the European Center for International Political Economy estimated the potential impact of hypothetical 25 percent tariffs from the US and Europe on drugs and their ingredients. China’s exports of finished medications would effectively disappear, dropping by 81 percent, and its exports of raw materials used to manufacture drugs to other countries would drop by 8 percent. 

The analysts wrote, “Given the importance of China … for supplying the global generic market, these declines would translate into reduced access to medicines and higher prices in many jurisdictions.”

This theoretical scenario doesn’t map perfectly onto Trump’s new China tariffs. But it approximates the scale of the risk the president is taking. The US increasingly depends on China not only for raw pharmaceutical ingredients but also for fully produced medications: American imports of finished Chinese-made medicines have increased by 600 percent since 2016.

If those products suddenly disappear from US pharmacy shelves, it’s not clear how we would replace them. The theory of the Trump tariffs is that an American manufacturer will step in. That is far from guaranteed, though.

If no one steps in, lifesaving medications could become unavailable, and people could die as a result.

For now, it does not appear the Trump administration is making any allowances to ensure life-saving medications aren’t taken off the market because of its trade policy. The trade association for generic drugmakers has lobbied for such an exemption, but hadn’t received one before Tuesday’s deadline.

It may take time for the consequences to be felt. But if bad outcomes do eventually befall American patients because of the tariffs, it should come as no surprise. It’s basic economics. And it’s entirely avoidable.