U.S. China Trade War Impact on Pharmaceutical Industry

Abstract

North America, specifically the U.S.,imports around 80percent of raw materials, amajority of whichcomesfrom China. Theongoingtrade war between the two powerful economies will have a huge impact on many industries,including pharma. This article speaksofthe list of pharmaceutical goods under the purview of this trade war. Further, it also discusses thewar’simpact on the pharmaceutical industry.

Introduction

A trade war has been ongoingbetween twoof the world’sbiggest economies—the U.S.and China. This hashadan impact on all possible trade transactions involving technology. It began with levy ofhigher tariffs on Chinese imports;in response, China blacklisted some of the U.S.companies. In May 2019, the Trump administration released acomprehensivelist of products (Lists3 and 4) facing a 10–25 percent increase inimport tariffs. On thislist aresome commodities used in the pharmaceutical industry. This article talks about the impact of increase in import tariffs onthepharmaceutical industry.

List of Goods under China Import Duty

Lists3 and 4 include a few commodities that go into manufacturing pharmaceutical products(Attachment 1), for example, some chemicals used as binding agents for drugs or forpackaging products. Hence, the tariff change will not have a direct impact on the finished products. Thus, this impact will be relatively less on pharmaceutical and related industries. Nonetheless, there will be a limited impact owing to the rise in cost of products that have pharmaceutical as well asother industrial applications.