January 16, 2025, Toronto - The recent tariff announcements made by President-elect Trump have raised serious concerns regarding the imposition of 25% tariffs on all goods including medicines exported from Canada to the U.S. Canada’s pharmaceutical manufacturing exporters rely on tariff-free access to the global market including the U.S. The repercussions of such tariffs will create significant issues for the Canadian pharmaceutical manufacturing industry, touching on critical aspects of national security, access to vital medicines for citizens, rising costs, and security risks.
National Security Considerations
Medicine production is a crucial aspect of national defence, and the U.S. has identified it as a significant vulnerability. Imposing tariffs on Canadian-made medicines would disrupt the flow of critical drugs from a trusted ally, potentially leading to increased reliance on suppliers from non-allied nations. This would not only undermine U.S. national security but also pose security risks by increasing dependence on countries that may not align with U.S. interests.
Access to Critical Medicines
The CPMEA represents Canadian pharmaceutical manufacturers that produce essential medicines for both domestic consumption and export, including to the U.S. According to Statistics Canada, Canadian pharmaceutical exports to the U.S. exceeded $9 billion in 2023. Canada also imports billions of dollars worth of medicines from the U.S., and the two markets are deeply interconnected. Any disruption in this trade relationship could result in shortages of critical medicines in the U.S., affecting the health and well-being of American citizens who rely on Canadian-made pharmaceuticals.
Rising Costs and Supply Disruptions
The imposition of tariffs on Canadian pharmaceutical exports would not only harm the economic interests of domestic producers but also lead to supply disruptions in the U.S. market. Drug shortages are already a global concern and cutting off a reliable and trusted source of pharmaceutical supply from Canada would exacerbate the problem, potentially leading to increased costs and challenges in accessing necessary medications.
Trade Agreements and Stability
Canada and the U.S. have been parties to various trade agreements that have facilitated barrier and tariff-free trade in pharmaceutical products since 1995. However, proposed actions by the Trump Administration raise concerns about the future stability of these agreements. To ensure continued seamless trade in pharmaceuticals between the two countries, Canada must explore establishing a separate bilateral agreement or side agreement to mitigate any disruptions to the pharmaceutical supply chain.
The potential imposition of tariffs on Canadian pharmaceutical exports to the U.S. poses significant challenges for the industry, jeopardizing national security, access to critical medicines, and economic stability. Both Canadian and U.S. authorities must engage in dialogue to address these issues and uphold the mutually beneficial trade relationship that has been established over the years.
The Canadian Pharmaceutical Manufacturers and Exporters Alliance (CPMEA) – Alliance fabricants et exportateurs pharmaceutiques du Canada (AFEPC) represents pharmaceutical companies that manufacture in Canada. We have come together in an Alliance to tell the story of drug production in Canada and to raise awareness of the unique issues facing our industry.
Click here to contact us, or email us directly at info@cpmea.ca.