America’s medicine cabinet must come home

President Trump has recently signed a new proclamation to swiftly accelerate the onshoring of pharmaceutical manufacturing — one of America’s most strategically vulnerable sectors. America’s vulnerability runs across all three stages of the medicine-making process. That begins with the raw ingredients, known as key starting materials; extends to the active pharmaceutical ingredients in the second stage; and finally it includes finished dosage forms, such as tablets, capsules, and injectables. Today, more than half of the branded pharmaceuticals distributed in America are manufactured overseas. Upstream dependence is sharper still. Only 11 percent of active pharmaceutical ingredients manufacturers are in the U.S., compared with 22 percent in China and 44 percent in India. And of all patented active pharmaceutical ingredients sold in the U.S., only 15 percent by volume are made here. America’s vulnerability runs deeper still at the front end of the supply chain, where more than 40 percent of the key starting materials used in U.S.-approved pharmaceuticals are sole-sourced from China and another 16 percent from India. While America still leads the world in pharmaceutical discovery, it no longer controls enough of the industrial base to turn that discovery into secure supply. We have become a design-and-discovery superpower with a hollowed-out production base. This new Trump proclamation addresses that failure. It establishes a 100 percent tariff on patented pharmaceuticals and associated pharmaceutical ingredients. It also creates a clear off-ramp for firms willing to make enforceable onshoring commitments. A company with an approved onshoring plan can pay a reduced 20 percent tariff for 48 months. If that same company enters into a most-favored-nation pricing agreement — committing to give American patients the lowest price it offers in any comparable foreign market — its tariff can go to zero until January 2029. The proclamation is calibrated so that the strongest incentives are aimed at the products for which dependency risk is greatest and where rebuilding domestic capacity can most improve national resilience: patented pharmaceuticals and their associated ingredients. Although generic drugs are excluded for now, that is a sequencing decision. The proclamation directs the secretary of Commerce, within one year, to report on whether circumstances warrant action on generics, making clear this is the beginning, not end, of the onshoring effort. Specialty categories such as orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody-drug conjugates, and certain medical countermeasures can also qualify for exceptions. The administration is also giving key allies more favorable tariff treatment, with lower country-specific rates for partners such as Japan, the EU, South Korea, Switzerland, and the United Kingdom — provided those jurisdictions honor their commitments under existing or contemplated U.S. agreements. Nor is this proclamation a paper pledge. Commerce is empowered to impose milestones, require periodic reporting, use third-party auditors, and claw back tariff relief, including retroactively, if companies cheat. Skeptics may argue America cannot compete on cost. That assumption is increasingly out of date. The real contest is no longer between labor-intensive American legacy plants and lower-wage factories abroad. It is between advanced, automated manufacturing technologies on U.S. soil — including continuous manufacturing — and older, slower, more brittle batch systems beyond our borders. In plain English, these innovative technologies shrink the old cost advantage of offshore production derived from cheaper labor, looser environmental standards and, in countries like China, large government subsidies. And this is not theory. In Trump’s first term, we began seeding domestic advanced-manufacturing capacity through support for companies such as Phlow, which has since emerged as one of the most visible examples of end-to-end domestic production of key starting materials, active pharmaceutical ingredients, and finished medicines. While a self-sufficient domestic pharmaceutical base will help better manage geopolitical and supply chain risks, this is also a quality-control problem. For pharmaceuticals, reliability is the product. A pill delayed, diluted, contaminated or unavailable is not a cheaper medicine — it is a national failure. When more than half of the pharmaceuticals distributed in the U.S. are manufactured overseas, contamination at one plant, a missed inspection, or a bottleneck halfway around the world can quickly become a shortage in an American hospital. The Food and Drug Administration has in recent years tracked more than 200 active drug shortages at a time. The larger principle is simple. A nation that cannot make its own essential medicines is a nation living on borrowed security. President Trump’s proclamation warns pharmaceutical companies that America is open for business but no longer open to the old model in which the U.S. shoulders the innovation, foreign countries capture the production, and American families absorb both the cost and the risk. In the Trump administration, economic security is national security. In pharmaceuticals, national security begins at your medicine cabinet. Peter Navarro is the White House senior counselor for trade and manufacturing.