Trump’s 100% Pharma Tariff: What It Means for CDMOs and the Future of Manufacturing

On October 1st, a 100% tariff on branded and patented pharmaceutical imports came into effect in the United States, marking one of the most disruptive policy shifts the industry has faced in decades. For years, pharmaceutical companies have relied on global supply chains and sourcing both raw ingredients and finished drugs from countries like India and China, where costs are lower and production capacity is vast. 

However, the new tariff is set to change all of that, as the policy is designed to discourage imports of patented drugs and increase investment in U.S-based facilities. Companies can only avoid the 100% tariff if they are actively building new domestic manufacturing plants, which is a major financial and operational commitment. For CDMOs, this creates both an urgent challenge and an exciting opportunity.

In this article, we explore how tariffs are reshaping pharmaceutical supply chains, what this means for CDMOs, and the key role of talent in driving U.S growth.

Contact CSG Talent to build the leadership and technical expertise your CDMO requires.

How Tariffs Are Reshaping U.S. Pharmaceutical Production

For decades, active pharmaceutical ingredients (APIs) have been predominantly produced in regions where they are found naturally at scale, while drug manufacturing has been concentrated in India, China, and parts of Europe.

Cost efficiency and global supply networks allowed companies to spread R&D and production around the world, however the new U.S tariff on branded and patented drugs will reverse this model. Instead of encouraging global efficiency, it penalises companies that continue to rely on overseas facilities.

Although this creates an incentive to reshore immediately, it also creates strain on pharmaceutical production, which is not a quick or flexible process. Facilities are complex, regulatory approvals are slow, and the talent required to build and operate these sites is already in short supply. Ultimately, the U.S pharmaceutical industry has been forced into a race to see who can secure capacity and talent the fastest.

How CDMOs Are Responding to the Surge in U.S Drug Manufacturing

The introduction of the tariff has placed CDMOs at the core of the reshoring movement. For pharmaceutical companies suddenly faced with difficult choices, CDMOs have become crucial partners in ensuring production continues and new facilities are ready as quickly as possible.

For CDMOs, this pressure creates two possible pathways. Some are rapidly expanding their own U.S operations to meet new client demand and manufacture drugs directly, while others are stepping into a consultancy and execution role, providing the specialised talent and project management pharmaceutical companies need to design, build, and run their own facilities. Both options require significant financial and strategic investment.

The main challenge is balancing short-term delivery with long-term capabilities. Expanding too aggressively risks overspending in a crowded market, while moving too cautiously could result in missed opportunities. CDMOs are being forced to make quick decisions about their capacity and workforce in an increasingly high-stakes market.

Costs, Incentives, and Tax Implications of U.S. Reshoring

For pharmaceutical companies, reshoring production to the U.S is a case of balancing finances, as they must either pay a 100% tariff on imported branded drugs or move manufacturing into America and accept a 21% federal corporate tax rate on domestic profits. Plus, state corporate income taxes add another 1-10% depending on location, and property and sales taxes introduce further costs. For companies investing billions into new facilities, these numbers quickly add up.

To mitigate the impact of these costs, organisations are increasingly turning to incentives designed to encourage domestic innovation and advanced manufacturing. The federal R&D tax credit rewards companies that increase research activity in the U.S, while the Advanced Manufacturing Tax Credit can reduce the cost of capital investments by up to 30%. Although these deductions help, the reality for CDMOs is that significant spending is required long before they see a return on their investment.

How Tariffs Are Reshaping the Global Pharma Manufacturing Network

The tariff’s effects don’t just affect the U.S market. Long-term global pharmaceutical supply chains are also being impacted, as companies that once operated across Europe, Asia, and North America now face pressure to reconsider their production networks.

This disruption is creating both opportunities and challenges for CDMOs around the world. Switzerland, which is home to many of the most established and technically advanced CDMOs, is likely to play a crucial role. Swiss CDMOs have deep expertise and a strong reputation in specialised manufacturing, meaning they can provide critical support as U.S operations scale.

Even major European pharmaceutical companies are now investing in U.S facilities as they realise that having a presence in the American market has become non-negotiable. The shift highlights that pharmaceutical manufacturing is becoming less regionalised as companies spread facilities across multiple regions.

Talent Challenges in U.S. Pharmaceutical Manufacturing

Immediate and Long-Term Talent Requirements

One of the biggest barriers to reshoring pharmaceutical manufacturing is the shortage of skilled professionals required to build and operate them. The U.S workforce does not currently have enough qualified engineers, scientists, and technical specialists to meet the sudden surge in demand, creating a serious issue for CDMOs and their clients.

In the short term, companies urgently need project managers, construction specialists, and validation engineers to get new facilities built and commissioned. Looking further ahead, site directors, process engineers, and manufacturing leaders will be required to maintain operations over the next 3-5 years.

R&D and formulation roles are also becoming increasingly important as companies bring development closer to their manufacturing hubs. CDMOs must take a strategic approach by treating each facility as a 5-year journey from construction through to commercialisation.

Talent Competition and Wage Inflation

Multiple organisations are chasing the same limited pool of candidates, which is inflating wages for critical roles such as validation engineers and site managers. For CDMOs, this adds further strain to budgets already stretched by construction and operational planning.

Recruitment strategies must balance immediate hiring with long-term succession planning and leadership pipeline development, and many organisations will look overseas to fill specialist gaps.

However, the $100,000 cost per H-1B visa petition has added a significant barrier to international hiring. At a time when rapid global collaboration is urgently needed, immigration costs risk slowing progress and delaying the reshoring efforts the tariff was designed to accelerate.

How CDMOs Can Thrive in a Competitive U.S. Market

Over the next 6-12 months, the U.S market is likely to become overcrowded as companies compete for both talent and capacity. Those who already have operational facilities and talent strategies in place will be the first to benefit. The ability to act quickly and secure skilled talent will be the difference between taking advantage of the surge in demand and falling behind in an increasingly competitive market.

CDMO Executive Search Specialists at CSG Talent

At CSG Talent, we specialise in connecting CDMOs with the senior leaders and technical experts required to scale at speed. Our executive search specialists understand the unique pressures of the pharmaceutical supply chain, from building project teams that can deliver new facilities on time to securing long-term leadership that drives operational success.

Whether you’re looking to strengthen immediate project delivery or plan ahead for commercialisation, our global network and industry expertise ensure you have access to the best senior-level technical and leadership talent.

Contact CSG Talent today to secure the CDMO leaders shaping the future of the industry.