The Donald Trump administration signed an executive order imposing tariffs of up to 100% on pharmaceuticals not produced in the United States. However, Korea's pharmaceutical and biotech industry breathed a sigh of relief after Washington applied a separate 15% tariff rate to the country.
President Trump signed the executive order on Wednesday, based on Section 232 of the Trade Expansion Act, levying high tariffs on pharmaceuticals and related raw materials produced outside the U.S. Major trade partner countries including Korea, Japan and Europe were assigned a 15% rate, while the United Kingdom received a 10% rate.
Given that Trump had previously signaled the possibility of tariffs as high as 200% on pharmaceuticals, Korea's 15% rate is interpreted as a negotiation success. In particular, generics, biosimilars and related raw materials were excluded from tariff targets and will be reassessed after one year, limiting the short-term impact.
The domestic industry views the outcome positively, noting that Korea has secured a relatively favorable position compared to major competitors such as China and India. Companies in countries facing tariffs of up to 100% will be at a significant price disadvantage by comparison.
The Korea Bio Association said, "Key export items such as biosimilars will maintain tariff-free benefits for at least one year, and contract development and manufacturing organization (CDMO) volumes produced in the U.S. may also be eligible for tariff exemptions." The association added, "The impact of this tariff measure on the industry overall will not be significant."
However, uncertainty remains with the reassessment scheduled in one year. The industry continues to prepare contingency measures, as policy changes cannot be ruled out.
Celltrion (068270.KS) has completed securing production facilities and transferring raw materials within the U.S. and is pursuing additional capacity expansion. SK Biopharmaceuticals (326030.KS) has also established a local production base. Samsung Biologics (207940.KS) recently finalized its acquisition of GlaxoSmithKline (GSK)'s U.S. biopharmaceutical production facility and is responding to potential policy changes.