The news: President Trump said to CNBC on Tuesday that forthcoming tariffs on pharma products imported to the US could reach 250%. It’s the highest rate on pharma tariffs that Trump has mentioned to date.

Catch up quick: Trump promised 200% tariffs during a cabinet meeting last month, noting there would be a 12- to 18-month delay for companies to “get their act together.” Separately, the administration is conducting a Section 232 national security investigation, which could lead to country-specific tariffs. Meanwhile, last week’s US-EU trade deal will cap tariffs on pharmaceuticals imported from Europe at 15% regardless of the national security investigation findings.

Zooming in: Trump told CNBC that the US would initially impose a “small tariff” on drug imports, before escalating to a 150% rate in 12 to 18 months, which will eventually reach 250%.

Why it matters: Trump wants more medicines to be made domestically. So far, it’s working. Pharma companies continue to answer the call with US manufacturing investments.

Leading drugmakers have been making pledges to produce more drugs in the US. Some of these site builds and expansions were previously planned as the COVID-19 pandemic exposed supply chain vulnerabilities. Pharma companies have cited Trump’s tariff threats as a reason to accelerate these investments, however.

CEOs from Merck, AstraZeneca, AbbVie, and Pfizer each noted increased US manufacturing capacity on their earnings calls over the past several days, with the ability to shift additional production domestically if needed.

Planned US drug manufacturing investments total over $250 billion, per analysis cited by CNN.

Our take: 250% is an enormous number, but it’s more of a threat than an end result that will impair the sector. Such a high levy rate will likely spur further manufacturing commitments, which is something Big Pharma is prepared for—especially if they’re given 18 months to move more production to the US.

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