Health x Tariffs (Part 1): How Will Trump's China Tantrums Impact Patients, Pharma and Global Health?
Headlines are screaming. Stocks are tanking. A global recession may be looming. These US-China tariffs shatter a decades-old principle: that medicines are kept out of trade wars.
🔬 This Real Diagnosis post breaks down the US-China tariffs, and what they mean for the health sector.
On 8 April, Trump has confirmed incoming tariffs on pharmaceuticals. The details are pending, but the direction is set. I'll continue to update this post as the story develops.
What’s Going On?
The US-China tariff announcements this week have certainly shaken up the world. These measures have set the stage for a trade war, and the consequences, particularly in the health sector, are global.
Here’s the latest timeline:
2nd April: US President Donald Trump announced a 10% tariff on all imports and an additional 34% tariff specifically on Chinese goods, effective on 9th April. Pharmaceuticals were initially exempted.
4th April: China retaliated with a 34% tariff on all US imports, including pharma, effective on 10th April.
9th April: US increased tariffs on Chinese goods to 104% after China failed to lift its retaliatory tariffs. Pharmaceuticals remained exempt, but Trump threatened more to come. At a state dinner in DC, he said "We're going to tariff our pharmaceuticals. They're going to come rushing back into our country".
9th April: China escalated again, announcing 84% tariffs on all US goods, including pharma.
13th April: on ABC News’ “This Week”, US Commerce Secretary Howard Lutnick said that US tariffs on pharmaceuticals (and semiconductors) will come “in the next month or two”, and “we need to make medicine in this country.” i.e. pharma tariffs are inevitably coming, but not as soon as Trump had said.
Global pharma has already felt the sting. AstraZeneca shares have fallen by 5.4%, GSK by 4.8%, and European giants like Sanofi, Roche, and Novartis have also posted sharp losses. Medical device stocks, including Boston Scientific, Medtronic and Siemens Healthineers, have also declined.
If the US is to impose tariffs on pharmaceuticals, this would shatter a longstanding precedent in the health sector. Pharmaceuticals have long been spared from trade wars, out of shared moral conviction: that saving lives is not just a market function, but a human right.
Since 1994, the WTO Pharma Agreement has provided protective scaffolding to keep life-saving drugs affordable across borders. It eliminated tariffs and other duties on over 7,000 pharmaceutical products and their derivatives.
Undoing that principle, even partially, risks far more than higher costs. It signals the US’s shift away from a global consensus that medicines should move freely, even when politics do not.
The health implications are massive
Yesterday, on 8th April, European Commission President Ursula von der Leyen convened an emergency meeting with pharmaceutical executives. When heads of state and CEOs gather without pre-scheduled agendas, it signals more than routine concern.
Countries including India (whose Nifty Pharma Index fell 3% on 9th April) and Australia (which exports $2 billion of pharma to the US per year) are extremely concerned, as they import and export huge amounts of pharmaceuticals with the US, but here, I want to focus on the US-China health relationship.
I have been drafting analysis for my clients, and here are the four major implications on my mind:
1. Innovation will slow
2. Supply chains will strain
3. International pharma at risk
4. China’s health industry will harden
1. Innovation will slow
Cross-border scientific research depends on the free flow of technology, equipment and people. Tariffs introduce friction at every point, adding cost and delays. Innovation becomes collateral damage, and to everyone’s detriment.
US’s: Illumina Inc: Blacklisted under China's "Unreliable Entity List," since 4th February 2025, i.e. blocked from exporting its gene sequencers to China. This cuts off a major market for next-generation sequencing and disrupts collaborative international research in genomics.
US’s Eli Lilly: Heavily relies on overseas production, particularly in Ireland. Stock declined over 9% following the tariff announcements. Relocating production back to the US will be tough, and these increased costs and logistical hurdles are diverting resources away from research and development, delaying the introduction of new therapies.
2. Supply chains will strain
These tariffs are expected to disrupt global supply chains, leading to drug shortages and increased prices for consumers. The pharmaceutical industry is particularly vulnerable because it relies heavily on international manufacturing. Arguably, the US is more at risk for supply chain bottlenecks. In 2023, only 4% of US’s Active Pharmaceutical Ingredients (APIs) for life-saving drugs, including asthma and diabetes medications, were produced domestically.
US’s Belluscura plc: medical device maker (portable oxygen concentrators), withdrew its 2025 financial outlook due to the latest U.S. tariffs on Chinese imports. Its Chinese-sourced components became up to 54% more expensive overnight.
EU Pharma: European pharma trade lobby EFPIA has warned that broader U.S. tariffs could expedite a shift of operations to the U.S., potentially weakening the sector in Europe.
3. International pharma at risk
The Chinese market remains a critical source of revenue for foreign pharma, especially in vaccines, oncology and rare diseases. The goal behind Trump’s tariffs is to promote domestic manufacturing. But in reality, the global pharmaceutical supply chain is too complex and interdependent to fully shift production back to the US. The more immediate outcome is likely financial harm, especially for US pharma companies that rely heavily on international sourcing, sales and research collaborations.
But for me, the bigger, long-term, risk isn’t tariffs alone. It’s how China could retaliate inside its borders at foreign pharma companies, whether through slower drug approvals, surprise audits or and bureaucratic roadblocks. I’ve written before about China’s preference for domestic brands over imports, and although Xi Jinping’s recent meeting with global pharma CEOs sent a strong public message of welcome and collaboration, those handshakes could fade quickly as trade tensions escalate. If relations keep souring, operational risks for foreign drugmakers inside China could rise even more, in ways that are harder to predict and overcome.
UK’s AstraZeneca: 12% of its global annual revenues came from China in 2024, the company's third-largest market. Tariffs threaten operational costs and complicate supply chains, potentially eroding profit margins.
France’s Sanofi: Opened multiple China R&D centres over the past five years, including in Suzhou, Chengdu and Beijing and now faces tougher import tariffs and slower approvals. Returns will become more uncertain.
Broader foreign industry: The European Federation of Pharmaceutical Industries and Associations (EFPIA) has warned that U.S. tariffs could expedite the relocation of pharmaceutical manufacturing from Europe to the United States.
4. China’s health industry will harden
China is not retreating. In fact, these new tariffs will likely help to accelerate and supercharge its domestic health ambitions further.
Beijing had already been promoting models for self-sufficiency (see my post on China’s rapidly maturing biotech capabilities). Since 2020, "Internal Circulation" (内循环) policies have encouraged Chinese firms to prioritise domestic R&D, manufacturing, and consumption, in order to minimise reliance on foreign imports.
In health, this meant: Pushing state-backed funding into biotech startups, fast-tracking drug and medtech approvals for domestic firms, strengthening IP protections for Chinese innovations, redirecting procurement toward "national champions" over foreign brands. These trade tensions may serve as further fuel for China to minimise and replace the vulnerabilities of external supply chains.
Short term, these tariffs might hurt Chinese firms trying to operate globally, but in the long term, they will likely deepen China's political and financial commitment to growing an independent, and globally competitive health ecosystem that thrives without US technology, capital or partnerships.
China’s GenScript Biotech: one of China's largest life sciences suppliers (especially in cell and gene therapy tools). US lawmakers launched an inquiry in early 2025, causing GenScript’s US operations stock prices to decline >30% in just two weeks. It is now restructuring its US presence to minimise new federal restrictions, by splitting its labs into separately incorporated entities.
Where is this all going?
No matter how the next days and weeks play out, the consequences will be long term.
Biotech IPOs could shift East: China is likely to accelerate listings on domestic stock exchanges like Shanghai’s STAR Market, deepening its own biotech capital base to reduce reliance on US capital markets.
Pharma manufacturing could reroute: Pharma manufacturing for APIs and med-tech could flow toward lower-cost, lower-tariff hubs outside China and the US, including across Asia and Latin America. This could redraw supply chains in ways that will outlast this trade war.
Splintered regulatory systems could emerge: As US and China decouple, parallel regulatory ecosystems for drug approvals, clinical trials, and market standards are likely to develop. This could slow down international drug development and complicate global launches.
Permanent price increases in health products: Even if tariffs fall back later, higher baseline costs for medicines, diagnostics and medical supplies are likely to persist.
But, ultimately, the frontline casualties of these tariff wars will not be the corporations.
Patients will pay
Many essential U.S. health supplies, including medicines, gloves, gowns, IV equipment, are imported from China. Tariffs will drive up costs and tighten supply. Patients will face higher prices and real risks of shortages.
In China, retaliatory tariffs and export controls could restrict access to imported cancer therapies, immunotherapies and diagnostic tools. Treatment delays and limited options will follow.
These disruptions won’t be evenly felt. They will cluster where patients rely most on innovation and international supply chains. The disease areas most exposed are the ones that rely on complex global supply chains: cancer, rare diseases and chronic illness. As trade tensions escalate, vulnerable patients around the world will be the ones forced to pay the price.
🔬 This Real Diagnosis post breaks down the US-China tariffs, and what they mean for the health sector.
As of today (9th April), Trump has confirmed incoming tariffs on pharmaceuticals. The details are pending, but the direction is set. I'll continue to update this post as the story develops.
Appreciate the analysis! Trying times for ordinary people.
This is a very comprehensive summary, I do wonder if the President will perhaps inadvertently save the early stage US Biotech sector, many of whose assets have been displaced by “cheaper” Chinese competitors. It may become unfeasible for US big pharma to in-license such drugs in the future.