Trump’s tariff threat exposes China’s tight grip on the global pharmaceuticals industry

Hong Kong/New YorkCNN — It’s the most prescribed antibiotic in the United States, used by tens of millions of people every year to treat bacterial infections including pneumonia, stomach ulcers, and strep throat.Yet, it isn’t exactly common knowledge that amoxicillin, a relative of penicillin that has been in chronic short supply, has only one manufacturer in the US, or that China controls 80% of the raw materials required for its production.That’s a major concern as US President Donald Trump threatens to impose tariffs on pharmaceutical imports, throwing a spotlight on America’s dependence on critical drug supplies from abroad.“Increasing trade hostilities or more protracted conflicts could devastate our access to amoxicillin or the ingredients used to make it should Beijing weaponize its supply chain dominance,” Rick Jackson, founder and CEO of Jackson Healthcare, which owns America’s sole amoxicillin manufacturer, told CNN.Last year, 96% of US imports of hydrocortisone (the active ingredient in the anti-itch cream), 90% of imports of ibuprofen (found in common over-the-counter pain relievers), and 73% of imports of acetaminophen (in other kinds of pain relievers) all came from China, according to CNN calculations based on trade data from the Census Bureau.With the US already facing shortages of many essential medications, experts warn that Beijing could potentially exploit this reliance as leverage in an escalating trade war. Tensions between the two sides have soared since Trump unleashed his trade assault on the world’s second-largest economy.While the two countries have announced a temporary truce that rolled back the three-digit tariffs for 90 days, relations remain tense with ongoing feuding over chip restrictions imposed by the US.Leland Miller, a commissioner at the US-China Economic and Security Review Commission, said the “chokepoints” that China holds over the US pharmaceutical supply are “detrimental to American security.”“Simply by having this leverage … whether or not they ever pull the trigger, causes us to change our policy positions on a lot of things, and that’s not good,” he said.So far, China has made no official public threat about weaponizing its dominant position in this segment of the pharmaceutical industry. But Trump’s tariffs on the sector, if imposed, could worsen existing drug shortages and drive up prices for Americans, undermining his promise to lower health care costs.Generic drugs, which are designed to provide the same therapeutic effects as brand-name ones and are released after their patents expire, account for 90% of all prescriptions in the US. India produces many of those generics, often from ingredients imported from China.Even though industry insiders and experts widely acknowledge America’s heavy reliance on Chinese pharmaceuticals, there is little comprehensive data on the full extent of this dependence across the sector, as major pharmaceutical firms have little incentive to disclose such information.That’s part of the reason why last month, the Trump administration launched a probe into pharmaceuticals imports as part of efforts to impose tariffs on the sector on national security grounds.A ‘catastrophic’ interruptionWith China making 80% of the world’s raw materials for amoxicillin, according to Jackson, it’s a clear example of just how vulnerable the world could be to “Chinese political or economic whims.”“Any interruption by China along the lengthy amoxicillin supply chain could be catastrophic, particularly in the face of a potential bacterial epidemic,” he said.In 2021, Jackson purchased a bankrupt manufacturing site located in Bristol, Tennessee, and renamed it USAntibiotics. The facility, built in the 1970s, used to produce enough amoxicillin for the whole country at the time.After the amoxicillin patent expired in 2002, the Tennessee facility began to make generic equivalents. At that point, it began facing lower-cost competition from overseas and eventually went bankrupt.Concerns about America’s dependence on Chinese pharmaceuticals aren’t new. As early as 2019, the US-China Economic and Security Review Commission recommended that Congress assess America’s pharmaceutical vulnerabilities. Two years later, when Jackson bought the amoxicillin factory, he cited national security and the need to ensure a steady supply of antibiotics as a major reason for the purchase.