Trump’s pharma tariffs threaten future investments even as immediate impact to S’pore seen as mild

SINGAPORE - US President Donald Trump on Sept 25 announced sweeping new tariffs, including

100 per cent duties on branded drugs imported into the US with effect from Oct 1.

He also said he would start charging a 50 per cent tariff on imported kitchen cabinets and bathroom vanities, following through on a pledge to bring back America’s furniture business.

Asian stocks fell on Sept 26,

with pharmaceutical companies leading the decline.

However, analysts suggest that the latest pharma tariffs are unlikely to have a significant impact on Singapore’s pharmaceutical exports in the immediate term, as most of the top exporters here have already committed to building new US facilities, which will qualify them for exemption from the levy.

In a Truth Social post on Sept 25, President Trump said: “Starting Oct 1st, 2025, we will be imposing a 100 per cent tariff on any branded or patented pharmaceutical product, unless a company is building their pharmaceutical manufacturing plant in America.”

“There will, therefore, be no tariff on these pharmaceutical products if construction has started,” he added.

Maybank economist Chua Hak Bin said the impact on Singapore’s pharmaceutical sector “will likely be limited”, as the large US multinational pharma companies here, including Pfizer, Moderna, Merck, AbbVie and Bristol Myers Squibb, are likely to have invested or are investing in the US.

But he said “future new investments will likely be dampened as large multinationals channel their money into manufacturing capacity in the US”.

Other analysts also warned that the pressure on companies to re-shore manufacturing lines or build entirely new facilities in the US will snuff or at least delay the flow of investments into the pharmaceutical sector here, which accounts for more than 12 per cent of Singapore’s domestic exports to the US.

DBS Bank’s senior economist Chua Han Teng said the tariff represents a negative development for Singapore’s high value-added pharmaceutical sector in the long run, as it marks a continuation of Mr Trump’s protectionist agenda.

“Continued imposition of US tariffs and ongoing uncertainty of new ones will hurt already weakened business sentiment.

“Furthermore, US tariff exemptions or deals tied to US investment commitments could have negative investment repercussions for Asia, including Singapore, raising the stakes for regional economies to boost their competitiveness and attractiveness to sustain foreign investment inflows,” he said.

The Singapore Association of Pharmaceutical Industries (Sapi), which represents 36 global companies with a presence here, said it is closely monitoring developments following Mr Trump’s latest announcement.

“While details are still emerging, we remain committed to working with the Ministry of Health and other stakeholders to help ensure continued access to innovative medicines and vaccines for patients in Singapore,” Sapi said in a statement, in response to The Straits Times’ queries.

Mr Lennon Tan, president of the Singapore Manufacturing Federation (SMF), said the trade association is “concerned that such tariffs may disrupt established networks and increase costs”.

He urged SMF members to consider diversification and scenario planning and said the association will continue to engage the relevant authorities to mitigate any adverse impacts.

A spokesperson from the American Chamber of Commerce in Singapore told ST that pharmaceutical tariffs, which could drive investments into the US, “do not necessarily preclude (investment) activity in other parts of world, including Singapore”.

“We urge both the US and Singapore governments to keep both trade and communication channels open, in order to support economic prosperity, supply chain security and a stable business environment,” the spokesperson added.

There is another channel that may have negative consequences for Singapore’s pharmaceutical exports.

Maybank’s Dr Chua said that while the US trade deal with the European Union in August appeared to have provided some exemptions for pharmaceutical products, it is not clear whether the new tariffs will override that agreement.

Singapore exports a significant proportion of active pharmaceutical ingredients to the EU, which are then processed into the final products and exported to the US market.

EU pharma companies with a presence in Singapore include Sanofi and Bayer.

A spokesperson for Bayer told ST that it is currently evaluating the situation.

Switzerland, which is not an EU member, and the US have not reached a trade deal.

However, some Swiss pharmaceutical companies with a presence in Singapore, including Roche and Novartis, have announced major investment plans in the US.

Earlier in 2025, Roche announced a US$50 billion (S$64.6 billion) investment in the US. In August, its independent subsidiary broke ground on a new manufacturing site in the state of North Carolina.

Several of America’s best-selling drugs are still largely produced abroad, mainly in Europe.

For instance, the main ingredient in Novo Nordisk’s diabetes treatment is made in Denmark. Johnson & Johnson’s immune-disease therapy Stelara and cancer drug Darzalex are manufactured in Switzerland and Denmark.

Opdivo, Bristol-Myers Squibb’s cancer immunotherapy, relies heavily on production in Ireland and Switzerland.

Although some of these players have announced increased investment directly tied towards US manufacturing, not all have broken ground on new plants and could be left exposed.

Shares of many Asian drugmakers fell on news of the pharmaceutical tariff, including South Korea’s Samsung Biologics and SK Biopharmaceuticals; and Japan’s Sumitomo Pharma, Otsuka Holdings and Daiichi Sankyo.

Shares in Takeda, which has a presence in Singapore, however, rose.

The company announced in May that it will invest US$30 billion in the US over the next five years in both manufacturing and research and development.

The negative consequences of US tariffs that are tied to demands for onshoring have been flagged repeatedly by Deputy Prime Minister Gan Kim Yong.

Speaking at a Singapore Business Federation event on Sept 9, DPM Gan said: “Many countries have made commitments to the US, whether to purchase more or to invest more in the US, and that they may do so at the expense of their existing partners, which may include Singapore.

“Therefore, significant uncertainties remain. It’s important for us to continue to monitor and watch these developments and be ready to respond.”

DPM Gan, who is also the Minister for Trade and Industry, attended the Asean economic ministers’ annual meeting in Kuala Lumpur, which concluded on Sept 26. The meeting included talks with US trade representative Jamieson Greer.

The ministers vowed to ramp up cooperation among South-east Asia’s economies, with a focus on upgrading and strengthening trade agreements.

Said DPM Gan: “Against the backdrop of global economic uncertainties, Asean is intensifying our work to double down on economic integration.”

He added that the regional grouping has also affirmed its shared goal to strengthen and diversify its economic and trade partnerships.