US tariffs on pharmaceuticals could hit Chinese export firms’ profit margins: analysts

Chinese drug makers could face squeezed profit margins, as US President Donald Trump is expected to press ahead with tariffs on pharmaceuticals despite his pledge to slash domestic prices, analysts said.

Trump signed an executive order on Monday to lower US drug prices to align with levels paid in other countries. But duties on imports are likely to remain – even at the risk of increased costs – as Washington seeks to reshore manufacturing and reduce dependence on supply chains in countries like China, according to health experts interviewed by the Post.

“[The] implementation of tariffs aims to bring manufacturing back to the US with higher costs and drug prices, which is contradictory to the drug price reduction policy,” said Vicky Zhu, a healthcare specialist at investment bank CMBC International.

However, she said the duties would probably be “much milder than expected”.

“The generic drug manufacturers in the US have narrow margins, and therefore cannot bear more costs arising from extra tariffs. In that case, they will pass on the cost to Chinese suppliers.”

Firms in China could be forced to bear the financial burden, or “shift capacity to Southeast Asian countries such as Thailand and Vietnam”, she added.

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