Trade Tariffs on Canadian Pharmaceuticals—Implications for US Drug Supply and Costs

Background
The U.S. has twice imposed trade tariffs on Canadian imports, exempting pharmaceuticals under the US-Mexico-Canada Agreement. However, new tariffs proposed for April 2025 may remove this exemption, potentially affecting drug availability and costs.

Objective
This study examined the impact of proposed U.S. trade tariffs on Canadian-manufactured pharmaceuticals.

Methods
We conducted a cross-sectional analysis of pharmaceutical drugs manufactured in Canada and exported to the U.S. using using IQVIA and NIH DailyMed data from 2022 to 2023.

Results
Of 22,082 drug products sold in the U.S. during the study period, 411 (1.9%) were manufactured in Canada, representing $3 billion in sales. The majority (79%) were generic products, and 21% were brand-name drugs, including 20 under patent protection. Among 3,099 unique drugs, 52 (1.7%) depended on Canada for at least 50% of supply, with 28 having no alternative suppliers.

Conclusion
While Canada is not the largest supplier of U.S. pharmaceuticals, the proposed tariffs could significantly increase costs and disrupt supply chains. We estimate that a 25% tariff could add $750 million in costs to U.S. pharmaceuticals dependent on Canadian manufacturing. Potential supply chain fragility, particularly for generic drugs, may exacerbate shortages, highlighting the need for policymakers to consider pharmaceutical exemptions from tariffs to prevent increased healthcare costs and supply disruptions.

Date Released: March 31, 2025