Trump's Pharmaceutical Tariffs Will Crush Small Biotech While Big Pharma Gets Sweetheart Deals

The Tariff Scheme

On a proclamation published earlier this month, Donald Trump announced 100% tariffs on branded pharmaceutical drugs and ingredients imported into the United States. Large companies get 120 days before the tariffs kick in. Smaller firms get 180 days -- as if an extra two months will somehow help them afford to relocate entire manufacturing operations.

The stated justification? National security. According to the White House, pharmaceutical imports are "being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States."

That's the official line. The reality is more complicated and far more corrupt.

Big Pharma Gets a Pass

Here's where it gets interesting. Companies can avoid the tariffs entirely by cutting deals with the Department of Health and Human Services under "Most Favored Nation" pricing agreements. Pharmaceutical giants including Pfizer, Novo Nordisk, and Eli Lilly have already entered these agreements -- meaning they face zero tariffs until January 2029.

Companies that already operate US manufacturing facilities, or claim they're planning to build them, face just 20% tariffs. So if you're a massive corporation with the capital to move operations or the lawyers to negotiate with HHS, you're fine. If you're a small biotech company developing treatments for rare diseases, you're screwed.

"For large pharmaceutical manufacturers who have the ability and financial scale to move operations to other countries, it can be cost-effective," Dan Williams, CEO of rare disease biotech company SynaptixBio, told BioProcess Insider. "Smaller biotechs like SynaptixBio generally cannot afford to move manufacturing facilities so easily."

The Real Impact

The Biotechnology Innovation Organization, which represents smaller biotech companies, came out swinging against the tariffs. "The reality is that any tariffs on America's medicines will raise costs, impede domestic manufacturing, and delay the development of new treatments -- all while doing nothing to enhance our national security," said BIO President and CEO John Crowley.

Crowley pointed out that small and mid-size biotech companies develop more than half of all FDA-approved medicines, yet often lack the capital to build dedicated manufacturing facilities. These are the companies that will bear the brunt of Trump's tariff scheme.

Williams explained the direct impact on patients: "We want to run clinical trials in the US, but adding tariffs now means importing those drugs into the US just adds cost. And as we are tackling a rare disease, our patient population is very low, so the pricing of those drugs becomes a major issue."

Translation: Patients with rare diseases will pay more for treatments, or lose access entirely, because Trump decided to play trade war games with their medicine.

The China Angle

The "national security" language in Trump's proclamation likely refers to China's role in pharmaceutical manufacturing. The US spent over $7 billion on Chinese-produced pharmaceuticals in 2024. About 13% of facilities that supply US manufacturing chains for active pharmaceutical ingredients are based in China, accounting for nearly a quarter of medicines imported to the US by volume.

That's a legitimate supply chain concern. But punitive tariffs won't fix it.

"Tariffs divert scarce resources away from research and development, weaken American biotech against China's rising industry, and ultimately, harm health and economic well-being of Americans," Crowley said. "Tariffs and MFN are not the answer."

Both Chinese and US contract manufacturing organizations have seen substantial growth in response to increased trade tensions. The tariffs will accelerate that trend -- but they won't bring manufacturing back to American soil in any meaningful way.

Who Benefits?

So if the tariffs won't improve national security, won't reduce drug costs, and won't bring manufacturing home, what's the point?

Follow the money. Large pharmaceutical companies that can afford to negotiate with HHS get exemptions. Companies that already have US facilities get reduced rates. Small biotech firms developing breakthrough treatments get hammered with costs they can't absorb.

"When one country imposes tariffs, it can trigger reciprocal action that impacts supply chain costs and causes disruption and delay due to increased administration," Williams noted.

The administration claims specialty products like orphan drugs and generic pharmaceuticals will be exempt, but the details remain murky. The White House and HHS Press Secretary did not respond to requests for comment about how those exemptions will work in practice.

The Bottom Line

Trump threatened these tariffs back in October 2025, then delayed them while negotiating with pharmaceutical giants. Companies like AstraZeneca and Merck committed to US manufacturing investments -- and got favorable treatment in return.

That's the pattern we've seen throughout this administration: threaten economic chaos, extract concessions from those who can afford to pay, and leave everyone else to deal with the fallout.

Small biotech companies can't afford to build new manufacturing facilities on short notice. They can't afford teams of lawyers to negotiate sweetheart deals with HHS. And they can't afford to absorb 100% tariffs on the materials they need to develop life-saving treatments.

But they'll have to try -- or shut down. And when they do, patients will lose access to treatments that might have saved their lives.

That's not national security. That's extortion dressed up in a proclamation.