All of the levies come with a stipulation—if these nations increase their tariffs, the United States will raise them on its end as well. Image Credit: Adobe Stock Images/Zenday.com
Yesterday, per AP and CBS News,1,2 US President Donald Trump enacted a multitude of tariffs expected to go into effect on Aug. 1, including a 25% import tax on both Japan and South Korea, along with new taxes on a dozen other nations. A 90-day negotiating period on country-specific US tariffs is set to expire on July 9.
The aforementioned taxes on Japan and South Korea were initially set at 24% and 25% respectively as of April, when Trump originally announced plans of reciprocal tariffs.3 The nations involved are those that are running trade surpluses with the United States, which is when the value of its exports exceeds the value of its imports. Basically, these are the nations in which the US has the largest trade deficits.
Reciprocal tariff clause could trigger escalation
All of the levies come with a stipulation—if these nations increase their tariffs, the United States will raise them on its end as well.
The import taxes on other nations (from greatest to least) are as follows:
- Myanmar and Laos: 40%
- Cambodia and Thailand: 36%
- Serbia and Bangladesh: 35%
- Indonesia: 32%
- South Africa, Bosnia and Herzegovina: 30%
- Kazakhstan, Malaysia, Tunisia: 25%
Key Takeaways
- Trump’s new tariffs target major US trade deficit nations, including Japan, South Korea, and 12 others, with import taxes up to 40% set to begin August 1—possibly escalating if retaliatory tariffs are issued.
- The pharmaceutical sector could see major cost increases, with a potential 25% tariff on medications projected to raise US drug costs by $51 billion annually and push prices up by nearly 13%.
- Drugmakers are accelerating reshoring efforts in response to tariff uncertainty, but building domestic infrastructure—especially for API production—will take years and may disrupt upstream supply chains in the short term.
Trump cites trade deficits in justifying tariff strategy
Trump shared the news via his Truth Social account,4 in which he posted the various letters.
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge. Please understand that these Tariffs are necessary to correct the many years of Japan’s Tariff, and Non Tariff, Policies, and Trade Barriers, causing these unsustainable Trade Deficits against the United States,” Trump mentioned in a letter to Japanese Prime Minister Shigeru Ishiba. His words to South Korean President Lee Jae Myung were similar.
Economic implications of tariff expansion
Although some worry that the US president’s recent decisions could slow economic growth and ultimately result in a recession, Trump believes these tariffs are needed in order to encourage the reshoring manufacturing efforts and help fund the “Big, Beautiful Bill” he signed last week. Essentially, notes CBS News,5 the bill is an extension of Trump’s 2017 Tax Cuts and Jobs Act. It makes most of the tax cuts permanent, while increasing spending for border security, defense and energy production. Per the Congressional Budget Office, it would add $3.4 trillion to federal deficits over the next 10 years.5
Pharma sector braces for potential impact
These levies could potentially impact the greater supply chain, but in terms of the pharma sector, there is yet to be any sort of indication as to when 25% tariffs on meds will be enacted. If it does take place, it could raise drug costs in the United States by nearly $51 billion yearly, while also raising US prices by as high as 12.9%, according to a report commissioned the trade association, Pharmaceutical Research and Manufacturers of America (PhRMA).6
A multitude of companies—including Regeneron, Roche, Merck, and Thermo Fisher6—have started to reshore production to the United States in order to avoid paying these tariffs, but this process can take years if the proper infrastructure is not already put in place.
Along those same efforts, Piramal Pharma Limited has also invested $90 million toward growing two of the company’s plants located in Lexington, KY and Riverview, MI.6 These facilities handle sterile compounded and active pharmaceutical ingredient (API) development and manufacturing respectively.
It’s important to note that both finished products and production of active APIs themselves are being affected, given that many are produced overseas, including in China. The challenge in accessing these ingredients could have financial repercussions far earlier along the chain than expected, including in research & development and clinical trial phases.
Stay tuned to Pharma Commerce for the latest tariff updates.
References
1. Boak J. Trump sets 25% tariffs on Japan and South Korea, and new import taxes on 12 other nations. AP. July 8, 2025. Accessed July 8, 2025. https://apnews.com/article/trump-japan-south-korea-tariff-25-2c725e8f06367e20f9300c1081ea4ec0
2. Cerullo M, Lee AMD. Trump threatens more than a dozen countries with new tariffs by Aug. 1. CBS News. July 8, 2025. Accessed July 8, 2025. https://www.cbsnews.com/news/trump-japan-korea-tariffs-august-1/
3. Saraceno N. Trump Issues New Reciprocal Tariffs. Pharmaceutical Commerce. April 3, 2025. Accessed July 8, 2025. https://www.pharmaceuticalcommerce.com/view/trump-issues-new-reciprocal-tariffs
4. Trump D. Trump’s Truth Social account. Truth Social. https://truthsocial.com/@realDonaldTrump
5. Hubbard K, Yilek C. Here’s what’s in Trump’s “big, beautiful bill” passed by Congress. CBS News. July 4, 2025. Accessed July 8, 2025. https://www.cbsnews.com/news/whats-in-trump-big-beautiful-bill-senate-version/
6. Saraceno N. The Tariff Effect: Greater Supply Chain Prepares for Repercussions. Pharmaceutical Commerce. June 4, 2025. Accessed July 8, 2025. https://www.pharmaceuticalcommerce.com/view/tariff-effect-greater-supply-chain-repercussions