Spanish generics industry warns US pharmaceutical tariffs could trigger shortages

Spanish industry raises supply warning

Spain’s generic medicines industry has challenged US President Donald Trump’s threatened tariffs on pharmaceutical imports, warning that the policy could increase the risk of drug shortages. The Spanish Generic Medicines Association, known as AESEG, said the proposed trade barrier would add pressure to supply chains that already operate with limited room to absorb higher costs.

El Economista reported the association’s concerns after Trump announced the possible application of tariffs to pharmaceuticals entering the United States. The measure has not been presented as a routine trade adjustment. Washington’s stated objective is to encourage pharmaceutical companies to manufacture more medicines in the United States rather than in overseas production centres.

Tariff threat targets an international supply chain

The pharmaceutical industry relies on production networks covering active ingredients, finished medicines, packaging and distribution. According to HuffPost España, the US administration opened national-security investigations into pharmaceutical and semiconductor imports as a potential basis for new duties. Trump has identified Ireland, India and China among the countries supplying medicines consumed in the United States.

For generic manufacturers, the central problem is their limited ability to pass additional costs through to buyers. Generic medicines compete primarily on price, while reimbursement and reference-pricing systems can restrict price increases. A tariff imposed at the US border could therefore be absorbed by manufacturers and importers, transferred to purchasers where contracts allow, or lead suppliers to reconsider products that no longer cover production and logistics costs.

European producers face several cost pressures

The warning comes amid a broader debate over the resilience of pharmaceutical manufacturing in Spain and the European Union. Cinco Días previously reported that Spanish pharmaceutical associations said medicine exports from Spain exceeded €21 billion in 2023, making pharmaceuticals the country’s fifth-largest export product. Those associations also estimated that inflation following the war in Ukraine generated more than €1.5 billion in additional costs over two years. They warned that weakened plants or reduced capacity would depress Spanish medicine exports and increase imports from outside the EU.

Price pressure is particularly significant in the generic segment. El País has reported disagreements among manufacturers over sharp price reductions for widely used medicines. Towa Pharmaceutical withdrew one product because it considered continued sales economically unsustainable, while Teva said matching a lower price could potentially require operating below cost. AESEG has separately noted that some medicines marketed in Spain have an industrial price below €1.60.

Shortage risk depends on tariff design

The effect on supply will depend on the final tariff rate, the products and countries covered, and whether generic or essential medicines receive exemptions. A broad duty would affect not only exporters but also US wholesalers, healthcare providers and patients if alternative suppliers cannot replace lost volumes quickly. Exemptions could limit the immediate impact on essential products but would leave manufacturers facing uncertainty over investment, contracting and inventory.

AESEG’s intervention places medicine availability at the centre of the tariff debate. The US policy is intended to attract manufacturing, but new domestic pharmaceutical capacity requires investment, regulatory approval and time. Until that capacity is operating, tariffs on established foreign suppliers could raise procurement costs or reduce the number of commercially viable sources. For producers and distributors, the immediate issue is therefore not only where medicines will eventually be manufactured, but whether existing supply can be maintained during any relocation.