[비즈한국] U.S. President Donald Trump has announced a 25% tariff on South Korean pharmaceutical products starting next month. With the persistent issue of "drug shortages" in the United States—our largest trading partner for pharmaceuticals—there is growing concern over how these tariffs will affect the domestic pharmaceutical industry. In his presidential campaign platform, President Trump pledged to bring the production of all essential medicines back to U.S. soil.
U.S. 'Drug Shortages' Affect 200–300 Items Annually
Under the Federal Food, Drug, and Cosmetic Act, the U.S. Food and Drug Administration (FDA) designates a product as experiencing a "drug shortage" when the supply of a drug in the U.S. fails, or is expected to fail, to meet current or projected demand, and discloses such items on its website. As of the 10th, 245 drugs are listed. This includes 91 items currently in shortage, 15 resolved, and 138 discontinued. Items listed as "resolved" are based on data from the past 6 months, while "discontinued" items are based on 1-year cumulative data.
Every year, about 100 new drugs are registered as "shortage drugs" in the U.S. Consequently, there is a cumulative shortage of 200 to 300 items consistently. According to the American Society of Health-System Pharmacists (ASHP) drug shortage reports, new shortage cases were 129 in 2020, 114 in 2021, 160 in 2022, 156 in 2023, and 128 in 2024. The first quarter of 2024 saw a record high of 323 cases, and the most recent report from the fourth quarter of last year confirmed 271 cases. By category, the most frequent shortages were in CNS (Central Nervous System), Antimicrobials, Fluids, Chemo (chemotherapy agents), and Hormone Agents, in that order.
U.S. Is Our Largest Importer and Exporter of Finished Pharmaceuticals
South Korea is directly affected by the U.S. drug shortage crisis because the U.S. is our largest trading partner. According to the Ministry of Food and Drug Safety’s pharmaceutical import and export data by country, as of 2023, the U.S. was the top importer of South Korean finished pharmaceuticals, with an import value reaching $1.066 billion (1.5524 trillion KRW). For active pharmaceutical ingredients (APIs), China has been the top importer and exporter for two consecutive years. As of 2023, the U.S. was also our largest export destination for finished pharmaceuticals, at $896 million (15.8591 trillion KRW). The U.S. was also the top export destination in 2022. For APIs, Japan was the top exporter to Korea at $311 million (451.9763 billion KRW), followed by China.
The U.S. has continuously worked to secure its pharmaceutical supply chain since the COVID-19 pandemic. In August 2020, President Trump issued an executive order to ensure domestic production of essential medicines, and in 2021, President Biden signed an executive order calling for a review of supply chain risks in four core areas, including pharmaceuticals. Subsequently, supply chain review reports containing three major recommendations and six policy tasks for strengthening domestic pharmaceutical supply chains were released. Later, President Biden reinforced the policy of protecting domestic pharmaceuticals through the "Executive Order on Advancing Biotechnology and Biomanufacturing Innovation."
Against this backdrop, the pharmaceutical industry is nervous due to President Trump's recent announcement of tariff impositions. President Trump announced that starting at 0:00 on the 12th (EST), a 25% tariff will be imposed on steel and aluminum, and from April 2, a 25% tariff and "reciprocal tariffs," which consider the target country's tariff rates, will be imposed on South Korean exports including automobiles, semiconductors, and pharmaceuticals. In an interview with Fox News on the 9th, when asked about the outlook after the reciprocal tariffs, President Trump said, "Some tariffs will probably go up depending on the situation," adding, "I don't think they're going to go down."
There is also a high possibility that President Trump will reinstate Executive Order 13944, which he signed during his previous term. Executive Order 13944 focuses on securing production capabilities and accelerating domestic production by reorganizing the domestic supply chain for essential medicines. In his campaign platform, Trump stated, "Currently, there is a shortage of more than 295 drugs. That is the highest number in five years. I will restore Executive Order 13944 of August 6, 2020, to implement phased tariffs and import restrictions on essential medicines, returning the production of all essential medicines back to America."