Pharmaceutical companies scramble to establish US manufacturing sites ahead of 200% tariff deadline

Pharmaceutical companies are racing to build or expand US plants before facing 200% tariffs on imported medicine. Merck, Johnson & Johnson, Eli Lilly, and Novartis have accelerated plans for new American manufacturing sites to avoid massive duties and maintain supply chain control. Investors will focus on companies' capital spending and construction timelines, which will be disclosed in quarterly reports.

Pharmaceutical companies are rapidly expanding their manufacturing footprint in the United States to preemptively avoid potential 200% tariffs on imported medicines. This move is driven by President Trump's latest threat to impose heavy tariffs on pharmaceutical imports, which could be implemented as early as August 2025. The market reaction has been relatively calm, with companies focusing on their capital spending and construction timelines to mitigate the impact of these potential duties.

Merck, Johnson & Johnson, Eli Lilly, and Novartis have all announced significant investments in new American manufacturing sites. Merck has allocated more than $12 billion to boost domestic manufacturing and research capabilities, with additional planned investments of more than $9 billion over the next four years [2]. Johnson & Johnson has announced an investment of more than $55 billion in the United States (over the next four years) in manufacturing, R&D, and technology [2]. Eli Lilly and Company has announced plans to bolster its domestic drug production across therapeutic areas by building four new pharmaceutical manufacturing sites in the United States [2]. Novartis AG has announced a planned $23 billion investment over five years in U.S.-based infrastructure [2].

These investments come on the heels of President Trump's April 2025 announcement of so-called "reciprocal tariffs" on almost all trading partners, which aimed to boost domestic manufacturing. The latest threat of tariffs on pharmaceutical imports is intended to encourage pharmaceutical companies to move their operations to the United States or face heavy tariffs. The imports comprise both finished drugs and active pharmaceutical ingredients (APIs) used to make drugs. China and India are among the major suppliers of APIs to the United States [2].

Investors will closely monitor these companies' capital spending and construction timelines, which will be disclosed in their quarterly reports. The expected growth rate for manufacturers' capital investments over the next 12 months is 0.3% [1]. This expansion in manufacturing capacity is expected to enhance these companies' supply chain control and resilience, particularly in the face of potential tariffs.

References:
[1] https://www.enr.com/articles/61009-enr-2025-top-500-sourcebook-expanding-pharmaceutical-production
[2] https://www.nasdaq.com/articles/pharma-companies-remain-calm-amid-fresh-tariff-threat-trump