US drug firm Merck says existing Trump tariffs will cost it $200m this year

TruthLens AI Suggested Headline:

"Merck Projects $200 Million in Costs Due to Existing Tariffs Amid US-China Trade Tensions"

US drug firm Merck says existing Trump tariffs will cost it $200m this year analysis cover image The Guardian 8.1
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Original Article Source: https://www.theguardian.com/business/2025/apr/24/us-drug-company-merck-trump-tariffs-pharmaceuticals-industry
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TruthLens AI Summary

Merck, the US pharmaceutical giant, has announced that it anticipates incurring an additional $200 million in costs this year due to existing tariffs imposed by the Trump administration, including a 10% tax on imports from various countries. This financial burden also factors in retaliatory tariffs enacted by foreign governments, particularly those from China. However, Merck's projections do not include the potential "major" tariffs that the Trump administration has threatened to impose specifically on pharmaceutical imports. Earlier this month, the administration initiated a 21-day national security investigation into the pharmaceutical industry, which is viewed as a precursor to possible new tariffs in the near future. The Trump administration has been vocal about its intention to bring back jobs and taxes that it believes pharmaceutical companies are avoiding by manufacturing drugs outside the United States, with particular criticism directed at countries like Ireland where Merck has significant operations.

In related developments, Roche, a Swiss pharmaceutical company, has sought exemption from these tariffs, arguing that its exports to the US match its imports from American manufacturing facilities. Roche's CEO, Thomas Schinecker, highlighted that the company is navigating a challenging environment but remains well-positioned, noting that a significant portion of its potential tariff exposure comes from just four of its medications, three of which have already had their production shifted to the US. Schinecker emphasized the complexity of drug manufacturing, stating that the imposition of indiscriminate tariffs fails to consider the existing manufacturing base the company has in the US. He also warned that a push for domestic production could lead to increased manufacturing costs. Roche confirmed its financial outlook and reported a better-than-expected 7% increase in first-quarter sales, driven by successful products in its portfolio, amidst ongoing uncertainties regarding the tariff situation and the future of the pharmaceutical supply chain.

TruthLens AI Analysis

The article highlights the financial impact of existing tariffs imposed by the Trump administration on Merck, a prominent US pharmaceutical company. The expected $200 million in additional costs reflects a significant burden on the company due to these tariffs, which include a 10% tax on imports globally. This indicates broader implications for the pharmaceutical industry, especially as the Trump administration considers more tariffs specifically targeting pharmaceutical imports.

Financial Implications for Merck and the Industry

Merck's financial projection of an additional $200 million in costs signals a substantial economic impact stemming from tariffs. This revelation not only underscores the challenges faced by pharmaceutical companies but also hints at potential price increases for consumers. As tariffs rise, companies may pass these costs onto consumers, leading to heightened healthcare expenses. Furthermore, the mention of retaliatory tariffs from foreign governments, particularly China, emphasizes the interconnectedness of global trade and its direct impact on US companies.

Political Context and Future Tariffs

The article notes the ongoing national security investigation into the pharmaceutical industry, a move that could lead to further tariffs. This investigation showcases the administration's focus on repatriating jobs and reshoring manufacturing to the US. The potential for additional tariffs raises concerns about the stability of drug prices and availability in the US market. The political landscape surrounding trade policies significantly affects corporate strategies, as companies like Roche are already seeking exemptions from tariffs, indicating a proactive approach to managing financial risks.

Public Perception and Trust Issues

The framing of the article may influence public perception regarding the pharmaceutical industry and its accountability. By highlighting tariff costs and potential job repatriation, there is an implicit suggestion that pharmaceutical companies are not fully contributing to the US economy. This narrative could foster distrust among the public, leading to calls for stricter regulations and oversight of the industry, which may further complicate the operational landscape for these companies.

Connection to Broader Economic Trends

The implications of this article extend beyond Merck and Roche. The discussion of tariffs reflects broader economic trends concerning globalization and protectionism. As countries reassess their trade relationships, the pharmaceutical sector finds itself at a critical juncture, balancing between global supply chains and national interests. The article hints at the potential for economic fallout, including job losses or restructuring within the industry if such tariffs are implemented.

Investor Reactions and Market Impact

Investors in the pharmaceutical sector may react to these developments by reassessing the risk associated with companies like Merck and Roche. If tariffs lead to increased costs and reduced profitability, it could impact stock prices and investor confidence. The mention of Roche’s commitment to invest $50 billion in the US may be an attempt to mitigate negative sentiment and show a long-term commitment to the market, but uncertainty remains prevalent.

Conclusion and Reliability of the Article

The article presents a credible overview of the financial and political challenges facing Merck and the broader pharmaceutical industry due to tariffs. While it raises important concerns about economic implications and public perception, it remains essential to consider these issues within the larger context of trade policies and their effects on global markets. The narrative may aim to highlight the complexities of the pharmaceutical sector's relationship with government policies, suggesting a push for transparency and accountability within the industry.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/business/2025/apr/24/us-drug-company-merck-trump-tariffs-pharmaceuticals-industry

The US pharmaceutical company Merck has said it expects to pay an extra $200m (£150m) in costs this year from tariffs thatDonald Trumphas already imposed, including his 10% tax on imports from around the world.

Merck said the projected costs also included retaliatory tariffs imposed by foreign governments on the US, particularly those related to China.

However, the projections do not account for threatened “major” tariffs that could be imposed just on pharmaceutical imports. The Trump administration opened a21-day national security investigationinto the industry earlier this month, seen as a first step to the imposition of levies in the coming weeks.

The US president has promised to repatriate jobs and taxes he believes the pharma companies are dodging by manufacturing drugs consumed in the US elsewhere in the world including Ireland, where Merck has a base, which he has singled out for criticism.

The Swiss company Roche said on Thursday it was petitioning Washington directly for exemption from tariffs, arguing it shipped as much to the US as it exported from its manufacturing bases in the US.

Earlier this week it signalled a further commitment to the US, announcing plans toinvest $50bn there.

In an earnings call on Thursday, Roche’s chief executive, Thomas Schinecker, said the company was going through volatile times but was well positioned.

He said four of its medicines accounted for 92% of Roche’s “potential tariff exposure” and that production of three of them had already been moved to the US. Declining to name the drugs, he added that the company had begun the lengthy and highly regulated procedures for setting up US production sites.

Schinecker said indiscriminate tariffs did not take into account the sizeable manufacturing base Roche already had in the US and the complexity of the drugs it manufactured. “For diagnostics, when you have 10,000 products, you cannot produce 10,000 products in every country.”

He said the company’s drug exports from its US plants were a key industry that was vulnerable to being hit by retaliatory tariffs.

Switzerland could face 31% US tariffs, which Trump put on hold for 90 days earlier this month along with sweeping tariffs on almost all goods from dozens of other countries.

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Pharmaceuticals are rated at a zero tariff around the world under a 1995 World Trade Organization agreement aimed at making medicines more accessible.

Schinecker said Roche was in touch with various levels of Trump’s administration, arguing that a US drive for all goods used in the country to be produced there would inflate manufacturing costs.

On Thursday, the company confirmed its full-year financial guidance and reported a forecast-beating 7% rise in first-quarter sales, driven by the breast cancer drug Phesgo, the eye drug Vabysmo and the allergy treatment Xolair.

Trump earlier this month reiterated plans for a “major” tariff on pharmaceutical imports, threatening an interwoven global supply chain and weighing on shares across the drug industry.

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Source: The Guardian