SHANGHAI, April 9th, 2026 — The Trump administration has once again wielded the tariff weapon, announcing a 100% duty on imported patented drugs and pharmaceutical ingredients. This move has raised critical questions: Is this an extension of last year's small-scale drug tariffs, or an entirely new tool of trade pressure? And will it disrupt the global ambitions of Chinese innovative drug companies?
Recently, Glenn Hou, Founding Partner of CIC, shared his insights in an exclusive interview with Yicai / China Business Network, dissecting the legal rationale behind the new tariffs, the dynamics of exemption mechanisms, and the global impact.
Here are the key takeaways from the interview:
A New Legal Tool, Not a Simple Extension
Contrary to initial assumptions, Glenn clarified that this 100% tariff is not a direct extension of the small-scale drug tariffs announced in August 2025. "It represents a new legal tool," he explained, following the U.S. Supreme Court's rejection of the previous tariffs in February. This action is based on Section 232 of the Trade Expansion Act of 1962.
"The objective is the same, but the legal basis is different," Glenn stated. He characterized President Trump's approach as single-minded, determined to use tariffs as leverage to compel global pharmaceutical companies to acquiesce. This invocation of Section 232 does not fundamentally alter the national security review framework for the global pharma industry but is instead wielded as a coercive economic measure. Ultimately, Glenn argued, resolving the issue will require negotiation and a return to the bargaining table.
Exemption Mechanisms and Differential Impact
A crucial aspect of the new policy is its built-in exemption mechanism. Glenn detailed that drugs from the European Union, Japan, South Korea, and Switzerland are subject to a reduced tariff of 15%, while the United Kingdom has negotiated a three-year transition period with zero tariffs. For companies from these regions, the impact is relatively contained.
Over the past year, major pharmaceutical companies, anticipating such moves, have largely already established or committed to building manufacturing facilities in the U.S., mitigating potential disruption.
For Chinese pharmaceutical companies, Glenn offered a clear assessment: "China's innovative drug sector primarily operates on a BD license-out model. From an industry development perspective, this policy will not change the pace or model choices for Chinese innovative drug companies going global."
However, he noted a nuanced potential upside for the few advanced Chinese companies that have already set up U.S. production facilities. Such firms could actually receive preferential support from the U.S. government in procurement.
The most significant impact, Glenn argued, will be on large, multi-product global pharma companies with a high revenue exposure to the U.S. market. They will be most motivated to negotiate deals. For smaller and medium-sized enterprises (SMEs), the policy includes important exemptions: generics and biosimilars are temporarily exempt (with a review after one year), and orphan drugs and animal health products can apply for waivers. "These categories are precisely the focus areas for many SMEs," Glenn noted. "They now face a strategic choice: pivot towards these exempted categories, or invest in U.S. production facilities to secure their sales."
The Future of Generics
Regarding whether generic drugs might eventually face tariffs, Glenn believes the one-year review period is telling. "The U.S. still has a significant gap in its generic drug and component supply," he said. "It cannot risk imposing tariffs prematurely, as that would sharply raise generic drug costs, lead to drug inaccessibility, and ultimately harm the U.S. healthcare system and patient welfare." The future of tariffs on generics, Glenn concluded, will depend on how quickly the U.S. can build up its domestic generic drug production capacity.
Part of the views in this article were published in Yicai: "US Wields Another Pharmaceutical Tariff Weapon: How Will Global Pharmaceutical Companies Respond?"
Yicai(CBN) Report: Financial Nightly; Executive Editor: Zhu Mengyun
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