Author: Maria Pechurina, MA, Director of International Trade @ Peacock Tariff Consulting
Earlier in 2025, on St. Patrick’s Day, US President Donald J. Trump lamented that Ireland, a “beautiful island of just 5 million people, has got the entire US pharmaceutical industry in its grasp.” In America’s pursuit of self-sufficiency, its overwhelming reliance on foreign pharmaceutical imports to supply American consumers has drawn President Trump’s attention. According to statements issued by the White House, Americans are paying a disproportionate share of costs for research performed in other countries, while also remaining the world’s largest consumers of advanced pharmaceuticals. As a result, on April 1, 2025, the US Department of Commerce initiated a Section 232 investigation to evaluate the national security implications of importing pharmaceuticals and pharmaceutical ingredients. The outcome could entail even higher tariffs on the sector; but for the United States, this is not necessarily wholly negative – a likely path forward may include investment partnerships by major pharmaceutical firms, co-investment in US infrastructure, and direct-to-consumer purchasing programs.
Ireland’s Role in the Global Pharmaceuticals Supply Chain
Ireland currently boasts the status of the third-largest exporter of pharmaceuticals globally, with annual exports exceeding €116 billion. Over 90 multinational pharmaceutical companies operate in Ireland, including industry leaders such as Janssen, Pfizer, Eli Lilly, and AstraZeneca. Notably, major American companies use Ireland as a manufacturing hub for products highly popular in the US market, including weight-loss drugs, Botox, and Viagra. Roughly 70% of Irish pharmaceutical exports, produced by a sector that hosts 19 of the world’s top 20 pharmaceutical companies and 18 of the top 20 medical device firms, are bound for the United States. In the first quarter of 2025 alone, Ireland exported €23.6 billion in pharmaceutical products. Employing about 50,000 people, the Irish pharma sector amounted to nearly half of all Irish exports last year.
However, the situation has inevitably led to significant economic uncertainty. Job losses are expected, and the unstable environment makes it difficult for companies to plan, recruit, or expand. Ireland’s GDP contracted by 1.0% in Q2 2025, largely due to reduced multinational exports following an artificial 7.4% spike in Q1 as companies accelerated shipments to beat the tariffs. There are also concerns about a potential contraction in vital corporate tax revenues, which reached a record €28 billion in 2024, driven in large part by taxes paid by these multinational pharmaceutical firms.
To circumvent the initial impact of the tariffs and roll with the daily punches, Irish pharmaceutical exports to the United States have surged, as companies rapidly stockpile goods. In January 2025, exports soared by 130% to €9.4 billion ($10.7 billion USD). This momentum carried into February, with exports climbing to €10.5 billion ($12.1 billion USD), compared with €1.9 billion ($2.2 billion USD) in February of the previous year. By March 2025, Ireland exported approximately $21.6 billion USD (€19.3 billion) worth of pharmaceuticals to the US. In May, the surge reached a staggering 833% increase. Notably, much of this Q1 2025 export growth was concentrated in ingredients for weight loss and diabetes medications, such as Eli Lilly’s Zepbound and Mounjaro, both manufactured in Ireland, highlighting robust underlying demand despite looming tariff threats.
The new U.S. tariff regime significantly impacts all of the EU, which collectively exports 20% of its goods to the U.S. and maintains a substantial annual trade surplus of $235.6 billion, but Ireland is particularly vulnerable to these tariffs due to its heavy reliance on U.S. multinational pharmaceutical companies which comprise a disproportionally large share of its total exports and provide a significant number of jobs. The U.S. push to become more autonomous when it comes to ensuring supply of crucial medicines for the American population regardless of the status of international relations is completely understandable. However, it is important to recognize that even the best-case scenario for re-shoring – creating new pharmaceutical manufacturing plants and bringing production back to the USA – will take not months, but years. In the meantime, Ireland will likely take a huge economic hit as Pharmaceuticals represent Ireland’s largest export to the U.S., accounting for over €44 billions of its €72 billion total goods exports to the U.S. in 2024. The tariffs may discourage American companies from setting up their future factories in Ireland. Moreover, the tariffs may lead to some structural risks such as recruitment freezes, corporate restructuring, or strategic slowdowns in manufacturing operations within the Irish pharmaceutical industry, as well as potential erosion of investment appeal.
Another point of concern is the probable creation of tariff disparity between Ireland & Northern Ireland as part of the US-UK deal, which could potentially lead to a division on the island with an existing history of turbulence. Presently, exports from Northern Ireland to the U.S. are subject to a lower tariff than exports from Ireland (10% vs 15%). Since the UK negotiated for preferential treatment for its pharmaceutical sector, drugs manufactured in the UK are not currently subject to the 10% tariff (pending the outcome of the section 232 investigation led by the US). Moreover, the tariff rate divergence will bring into focus the stringent requirements of the US Customs & Boarder Protection; merely transporting Irish products into Northern Ireland for repackaging and export to the United States will not be sufficient to comply with the US country of origin rules to secure lower tariff rates for Irish goods, unless actual “substantial transformation” occurs.
Responses & Outlook:
The response from multinational entities has varied. AstraZeneca, for example, has committed $50 billion in U.S. investment while some companies may be reprioritizing U.S. investments over investing in other global sites. Although funds may not be pulled away directly from investing in Ireland, they may come from buckets of money initially aimed at employee wage increases, new employee recruitment and expansion or opening new manufacturing plants. It is possible that large companies may engage in consolidations or launch partnerships to mitigate rising costs.
Tariffs could absolutely rise further yet. President Trump proposed an initial “small tariff” (not specifying the amount but likely 25%) to be imposed on pharmaceutical imports, with escalation to 150% within 18 months and 250% eventually, intended to incentivize domestic manufacturing of pharmaceuticals. The imposition of tariffs by the United States will likely drive up the cost of imported drugs significantly and will incite a complex reshaping of the global pharmaceutical landscape, particularly as the U.S. actively pursues the reshoring of its domestic production. The U.S. pharmaceutical The US pharmaceutical sector, comprising a healthy blend of legacy businesses & pharma giants, rising stars in biotech and international players, is expected to display steady growth: estimated at $634.32 billion in 2024, the market size is projected to grow at a compound annual rate of 5.72% from 2025 to 2030, to reach an estimated value of $ 883.97 billion by 2030The growth can be attributed to the US government’s efforts to improve the affordability and accessibility of pharmaceuticals as well as to reduce the nation’s heavy reliance on foreign goods in a sector key to national security. While the pharmaceuticals manufacturing is distributed across the United States, with a 27% concentration in the Midwest & South, 26% concentration across the Pacific and Mountain regions and 20% on the East Coast. New Jersey, Pennsylvania, California, New York, and North Carolina are in the top 5 highest concentrated states for employment in the pharmaceutical industry and may see an increase in employment growth and investment in manufacturing infrastructure projects. However, with 55% of pharmaceutical companies distributing internationally and 22% of companies importing at least some raw materials used, they may be subject to reciprocal tariffs imposed by other nations and undoubtedly display a notable reliance on global supply chains, thereby experiencing disruptions and economic uncertainty.
Conclusion
The tariffs imposed by the Trump administration, coupled with ongoing uncertainty, will undoubtedly disrupt Ireland’s pharmaceutical sector. These policies are likely to cause supply chain disruptions, layoffs, and a loss of investor confidence in the industry. A decline in government tax revenues is expected, and US consumers may see increased medication prices in the short term. Globally, these effects are likely to continue throughout the sector. While the US goal of pharmaceutical self-sufficiency may serve long-term interests, the immediate effect on Ireland’s economy will be significant, prompting the sector to seek new markets and redirect investment. While the United States has a robust pharmaceutical sector, it may take some time until the country can become self-sufficient in producing ample amounts of medicine to satiate the enormous US demand. Lastly, given the high proportion of companies that sell internationally, and source imported materials, the US industry may experience economic disruptions due to reciprocal tariffs from other nations.
If you’d like to know how these changes may impact your business, Peacock Tariff Consulting can help with creating a customized mitigation strategy to help you navigate the rapidly evolving Trade landscape. Get in touch with us today!