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Trump Slams 100% Tariff on Imported Drugs: Pharma ETFs Take a Hit
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On Sept. 25, 2025, President Donald Trump imposed a new set of tariffs on the U.S. economy, including a 100% levy on imported branded and patented pharmaceutical products, effective Oct. 1. This announcement may be just the tip of the iceberg, especially considering that last month the President told CNBC (as quoted by a CNN press release) that his ultimate goal is to impose tariffs of up to 250% on drug imports over time.
Immediate Market Reaction
As one can imagine, yesterday’s tariff announcement sent a swift shockwave through global markets, triggering a pronounced plunge in the stock prices of major pharma manufacturers and, by ripple effect, dragged down pharmaceutical exchange-traded funds (ETFs).
The policy, which was part of the current U.S. administration’s broader push to incentivize domestic manufacturing, instead ignited investor fears over rising costs and supply-chain disruptions in the global pharmaceutical sector.
Consequently, we witnessed abrupt sell-offs of major U.S. pharma stocks, such as Eli Lily ((LLY - Free Report) ), Pfizer ((PFE - Free Report) ), and AstraZeneca ((AZN - Free Report) ), in yesterday’s trading session. In a domino effect, prominent pharma ETFs like SPDR S&P Pharmaceuticals ETF ((XPH - Free Report) ), First Trust NASDAQ Pharmaceuticals ETF ((FTXH - Free Report) ), iShares U.S. Pharmaceuticals ETF ((IHE - Free Report) ) and VanEck Pharmaceutical ETF ((PPH - Free Report) ) suffered notable losses.
Implications of The Tariff in the Short-term
In 2024, U.S. imports of pharmaceuticals nearly tripled to around $213 billion from a decade earlier, according to data from the United Nations Comtrade Database (as stated in a CNBC report). This reflects the extent to which U.S. citizens are dependent on imported medicines. So, no doubt the immediate effect of this tariff imposition will be negative in many ways.
First, this will put a heightened cost pressure on pharma companies, squeezing their profit margin and potentially translating this into the pockets of common American citizens, curbing their medicine purchasing power.
Second, the disruption to the already fragile supply chain for drugs could lead to a shortage of medicine availability. There is also a risk that cost-cutting measures could affect the production quality of some medicines. Lastly, smaller biopharma companies with limited capital to withstand tariff-induced costs may face financial distress, which, in the worst-case scenario, could even lead to bankruptcy.
What Lies Further Ahead?
Over the long term, however, this tariff imposition may be potentially beneficial, although it is subject to complexity. For example, many pharma companies like Eli Lilly, Johnson & Johnson, and Merck have already announced billions of dollars in investments for new U.S. facilities, which should ideally boost U.S. drug manufacturing.
However, it may take years for these new plants to become operational, subject to various government drug-safety regulations, and until then, higher cost and supply-chain disruption will continue to hover around the pharma sector.
Pharma ETFs That Took a Hit
As shown below, ETFs with heavy exposure in U.S. pharma took an immediate hit after Trump announced a 100% tariff on imported drugs.
This fund provides exposure to the pharmaceuticals segment of the S&P Total Market Index (S&P TMI). Its top five holdings include California-based Corcept Therapeutics (3.09%), Ligand Pharmaceuticals (2.69%) and Maryland-based Supernus Pharmaceuticals (2.69%).
XPH lost 1.6% in the last trading session. The fund charges 35 basis points (bps) as a fee.
This fund offers exposure to U.S. pharmaceutical and biotechnology companies. Its top five holdings include Illinois-based AbbVie Inc. (7.59%), New Jersey-based Johnson & Johnson (7.24%) and Merck & Co., Inc. (6.88%), as well as New York-based Pfizer Inc. (7.06%) and Bristol Myers Squibb (6.79%).
FTXH slumped 2% in the last trading session. The fund charges 60 bps as a fee.
This fund provides exposure to U.S. companies that manufacture prescription or over-the-counter drugs or vaccines. Its top five holdings include Johnson & Johnson (22.84%), Indiana-based Eli Lily (22.34%), New York-based Royalty Pharma Plc (4.49%) and Pfizer Inc. (4.46%).
IHE lost 1.6% in the last trading session. The fund charges 38 bps as a fee.
This fund provides exposure to companies involved in pharmaceuticals, including pharmaceutical research and development, as well as production, marketing and sales of pharmaceuticals. Its top five holdings include Eli Lily (19.79%), Merck Co (7.22%) and Pfizer Inc. (4.94%).
PPH plunged 2.3% in the last trading session. The fund charges 36 bps as a fee.
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Trump Slams 100% Tariff on Imported Drugs: Pharma ETFs Take a Hit
On Sept. 25, 2025, President Donald Trump imposed a new set of tariffs on the U.S. economy, including a 100% levy on imported branded and patented pharmaceutical products, effective Oct. 1. This announcement may be just the tip of the iceberg, especially considering that last month the President told CNBC (as quoted by a CNN press release) that his ultimate goal is to impose tariffs of up to 250% on drug imports over time.
Immediate Market Reaction
As one can imagine, yesterday’s tariff announcement sent a swift shockwave through global markets, triggering a pronounced plunge in the stock prices of major pharma manufacturers and, by ripple effect, dragged down pharmaceutical exchange-traded funds (ETFs).
The policy, which was part of the current U.S. administration’s broader push to incentivize domestic manufacturing, instead ignited investor fears over rising costs and supply-chain disruptions in the global pharmaceutical sector.
Consequently, we witnessed abrupt sell-offs of major U.S. pharma stocks, such as Eli Lily ((LLY - Free Report) ), Pfizer ((PFE - Free Report) ), and AstraZeneca ((AZN - Free Report) ), in yesterday’s trading session. In a domino effect, prominent pharma ETFs like SPDR S&P Pharmaceuticals ETF ((XPH - Free Report) ), First Trust NASDAQ Pharmaceuticals ETF ((FTXH - Free Report) ), iShares U.S. Pharmaceuticals ETF ((IHE - Free Report) ) and VanEck Pharmaceutical ETF ((PPH - Free Report) ) suffered notable losses.
Implications of The Tariff in the Short-term
In 2024, U.S. imports of pharmaceuticals nearly tripled to around $213 billion from a decade earlier, according to data from the United Nations Comtrade Database (as stated in a CNBC report). This reflects the extent to which U.S. citizens are dependent on imported medicines. So, no doubt the immediate effect of this tariff imposition will be negative in many ways.
First, this will put a heightened cost pressure on pharma companies, squeezing their profit margin and potentially translating this into the pockets of common American citizens, curbing their medicine purchasing power.
Second, the disruption to the already fragile supply chain for drugs could lead to a shortage of medicine availability. There is also a risk that cost-cutting measures could affect the production quality of some medicines. Lastly, smaller biopharma companies with limited capital to withstand tariff-induced costs may face financial distress, which, in the worst-case scenario, could even lead to bankruptcy.
What Lies Further Ahead?
Over the long term, however, this tariff imposition may be potentially beneficial, although it is subject to complexity. For example, many pharma companies like Eli Lilly, Johnson & Johnson, and Merck have already announced billions of dollars in investments for new U.S. facilities, which should ideally boost U.S. drug manufacturing.
However, it may take years for these new plants to become operational, subject to various government drug-safety regulations, and until then, higher cost and supply-chain disruption will continue to hover around the pharma sector.
Pharma ETFs That Took a Hit
As shown below, ETFs with heavy exposure in U.S. pharma took an immediate hit after Trump announced a 100% tariff on imported drugs.
SPDR S&P Pharmaceuticals ETF (XPH - Free Report)
This fund provides exposure to the pharmaceuticals segment of the S&P Total Market Index (S&P TMI). Its top five holdings include California-based Corcept Therapeutics (3.09%), Ligand Pharmaceuticals (2.69%) and Maryland-based Supernus Pharmaceuticals (2.69%).
XPH lost 1.6% in the last trading session. The fund charges 35 basis points (bps) as a fee.
First Trust NASDAQ Pharmaceuticals ETF (FTXH - Free Report)
This fund offers exposure to U.S. pharmaceutical and biotechnology companies. Its top five holdings include Illinois-based AbbVie Inc. (7.59%), New Jersey-based Johnson & Johnson (7.24%) and Merck & Co., Inc. (6.88%), as well as New York-based Pfizer Inc. (7.06%) and Bristol Myers Squibb (6.79%).
FTXH slumped 2% in the last trading session. The fund charges 60 bps as a fee.
iShares U.S. Pharmaceuticals ETF (IHE - Free Report)
This fund provides exposure to U.S. companies that manufacture prescription or over-the-counter drugs or vaccines. Its top five holdings include Johnson & Johnson (22.84%), Indiana-based Eli Lily (22.34%), New York-based Royalty Pharma Plc (4.49%) and Pfizer Inc. (4.46%).
IHE lost 1.6% in the last trading session. The fund charges 38 bps as a fee.
VanEck Pharmaceutical ETF (PPH - Free Report)
This fund provides exposure to companies involved in pharmaceuticals, including pharmaceutical research and development, as well as production, marketing and sales of pharmaceuticals. Its top five holdings include Eli Lily (19.79%), Merck Co (7.22%) and Pfizer Inc. (4.94%).
PPH plunged 2.3% in the last trading session. The fund charges 36 bps as a fee.