Generic Drugs May Not Face Tariffs

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ACA gridlock: President Trump said he’s not willing to entertain talks about extending Affordable Care Act subsidies until the U.S. government reopens.

The Trump administration isn’t planning to impose tariffs on generic drug imports, The Wall Street Journal reported, although the move isn’t final and could change in the coming weeks. The exclusion from tariffs would bring some relief for generic drugmakers, as nine out of ten prescriptions filled in the U.S. are for generic drugs.

“The administration is not actively discussing imposing Section 232 tariffs against generic pharmaceuticals,” said Kush Desai, White House deputy press secretary. A Commerce Department spokesperson said the ongoing 232 investigation into pharmaceuticals wouldn’t result in tariffs on generic drugs. Section 232 empowers the U.S. president to impose tariffs on imports if they threaten national security.

Potential impact: Some officials reportedly cautioned against generic drug tariffs, saying the levies would result in price hikes and drug shortages. Tariffs are also unlikely to make U.S. generic drug production profitable, given the very low cost of producing them in countries like India. But some Commerce Department officials argued that the tariffs may be necessary to reduce U.S. dependence on global supply chains. There was no “daylight or disagreement between the Commerce Department and White House on this issue,” spokesperson Desai said.

Reshore manufacturing: Desai said the administration is “implementing a nuanced and multi-faceted approach to onshore manufacturing of generic pharmaceuticals and ensure that Americans are never again left in the lurch due to foreign dependence as they were during the COVID era.” Some officials are said to be looking into possible government assistance to reshore U.S. generic drugmaking. This could include federal grants or loans to U.S. manufacturers of generic drugs, potentially involving funds from foreign countries that were secured as part of tariff deals.

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Today’s Markets

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On The Calendar

Companies reporting today include PepsiCo (PEP) and Tilray Brands (TLRY).

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