President Donald Trump has announced that all generic drugs imported into the United States would continue to enjoy a zero-percent tariff for another two years, sending major drug stocks up.
According to the announcement posted on Truth Social on July 21, the policy will be effective from August 1, after which the tariff rate will again be raised to 100% for one year and to 200% for another.
“Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for a two year period of time, after which the TARIFF will be raised to 100% for a one year period of time, and 200% thereafter,” Trump wrote.
In the wake of Trump’s announcement, a number of drug stock prices shot up. The biggest gainers were Summit Therapeutics (NASDAQ: SMMT), which skyrocketed 8.37%, followed by Axsome Therapeutics (NASDAQ: AXSM), which saw a 6.91% uptick.
Similarly, Jazz Pharmaceuticals (NASDAQ: JAZZ) rose 4.42%, accompanied by Arrowhead Pharmaceuticals (NASDAQ: ARWR), up 4.01%. Corcept Therapeutics (NASDAQ: CORT) gained 4.06%, while AstraZeneca (NYSE: AZN) and Eli Lilly (NYSE: LLY) rose 2.93% and 2.99%, respectively.
CORT and LLY stock price July. Source: Finbold
Pharma stocks rise as Trump seeks to lower drug costs
In his post, Trump said the measure is intended to “RESHORE Generic Pharmaceutical Production into America.” Moreover, he added that companies that fail to build manufacturing plants and equipment in the U.S. within a specified timeframe would face penalties.
“This is done in order to RESHORE Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them. The objective of this Policy is to protect the people of the United States,” he added.
The move follows Trump’s continued push to lower prescription drug costs through his “most-favored-nation” pricing policy, which seeks to align U.S. drug prices with those paid in other high-income countries.
According to the U.S. Food and Drug Administration, generic medicines account for more than 90% of all prescriptions filled in the United States, so a reaction in pharma stock prices was to be expected.
For context, major global drugmakers reached agreements with the U.S. government last year that exempted billions of dollars’ worth of pharmaceutical products from tariffs. In April, Trump also signed an executive order imposing 100% tariffs on imported branded pharmaceuticals unless manufacturers agreed to government drug pricing arrangements.
Featured image via Shutterstock
