Recently, the US administration announced a new wave of tariffs, including a 100% levy on branded pharmaceuticals entering the United States from October 1, 2025. While no formal enforcement rules or customs guidance have been released due to the ongoing US government shutdown, the announcement has already rattled global pharmaceutical supply chains and sent share prices tumbling.
This raises several critical questions. What exactly qualifies as a branded pharmaceutical? What will this mean for pricing and competitiveness in the world’s largest health market? And most importantly, what does this mean for health and wellness brands that have long relied on access to the US market?
In this blog, we’ll break down what’s known, what’s uncertain, and how Australian health and wellness brands can prepare for what’s ahead.
What We Know So Far
As part of its ongoing effort to bring manufacturing back to the United States, the Trump administration has declared a 100% tariff on branded pharmaceuticals, with exemptions for generic drugs and for companies that are already “breaking ground” on US production facilities.
Broadly speaking, branded pharmaceuticals are the original, name-brand drugs developed by pharmaceutical companies. They are protected by patents that grant manufacturers exclusive rights to produce and sell the medicine for a set period. An example of this would be Panadol, a pain reliever made by GSK.
Generic pharmaceuticals, on the other hand, are versions of these drugs produced once the patent expires. They contain the same active ingredient in the same dose and form but are marketed under the chemical name rather than a brand name. In this case, acetaminophen is the generic equivalent of Panadol.
Additionally, not all countries and companies will face the full weight of the proposed 100% tariff. For example, a recently concluded US-EU trade framework agreement places a 15% ceiling on tariffs for European goods, including pharmaceuticals, effectively creating a safety ceiling for EU exporters. Meanwhile, large pharmaceutical firms such as Pfizer have struck a deal with the Trump administration. For example, Pfizer secured a three-year tariff relief in exchange for commitments to lower US drug prices and expand domestic manufacturing investment.
What Isn’t as Clear
While the announcement of a 100% tariff on branded pharmaceuticals has set off alarm bells around the world, many of the policy’s details remain uncertain.
The first ambiguity lies in the definition of “branded pharmaceuticals.” In practice, this isn’t a black-and-white distinction. Beyond patented name-brand drugs, the pharmaceutical landscape includes biosimilars, combination products, and branded generics, and it’s unclear whether these categories will also fall under the proposed measure.
There is also uncertainty around the scope of the tariff. The administration has referred broadly to branded pharmaceuticals but has not clarified whether the policy will apply only to finished, packaged drugs or also to active pharmaceutical ingredients (APIs) and other components used in production. This, in turn, raises questions about rules of origin. In theory, a company conducting final formulation or packaging within the United States could argue that its products are domestically produced and therefore bypass the tariff altogether.
Finally, the “building a plant” condition remains loosely defined. While the policy exempts companies that are “breaking ground” on US manufacturing facilities, it offers no specifics on how large those investments must be or which products it would cover.
What This Means For Australian Exporters
For Australian health and wellness brands exporting to the US, one thing is clear: a 100% tariff would effectively double the landed cost of branded pharmaceuticals, making it difficult for many to remain competitive without major adjustments.
In the near term, exporters should revisit their pricing and margin models to understand how much cost they can absorb and where increases may need to be passed on to consumers. At the same time, it may be necessary to rethink broader market strategy, such as exploring U.S. partnerships, co-manufacturing arrangements, or limited domestic production to qualify for potential exemptions.
However, none of these options comes without significant trade-offs. Establishing a US presence or hiring locally would significantly increase long-term overheads. For some brands, that may prompt a difficult but necessary question: is the U.S. market still worth pursuing under these conditions?
Conclusion
For now, the 100% tariff remains more threat than reality. With the U.S. government currently in a two-week shutdown, no formal ratification or enforcement guidance has been issued, and it may be some time before the full picture becomes clear.
Still, this period of uncertainty is the right moment to prepare. Policy shifts of this scale can reshape margins, supply chains, and market strategy overnight. The brands that stay informed and plan early will be the ones best positioned to adapt when the rules do change.
I’m following these developments closely and helping Australian health and wellness brands stress-test their U.S. strategies. If you’d like to assess your exposure or explore how to protect your position in the U.S. market, book a short discovery call with me here – I’d love to help you plan your next move strategically.
