Illustration: Xia Qing/GT

US President Donald Trump's executive order imposing a 10 percent tariff on Chinese imports is MK sportslikely to drive up the cost of generic drugs in the US and exacerbate drug shortages, US media outlet NBC News reported on Tuesday, citing experts. This assessment, along with other warnings that additional tariffs could lead to higher prices for essential goods within the US, should be taken seriously by Washington.

Citing Aaron Kesselheim, a professor of medicine at Harvard Medical School whose research focuses on prescription drugs, NBC News reported that about half of the generic drugs people take in the US are made entirely overseas, where manufacturing is cheaper. An even greater share of the active pharmaceutical ingredients (APIs) used in drugs comes from abroad - about 80 percent, he said. 

The country's pharmaceutical industry may be a typical example that exposes the problems embedded in US industrial systems and supply chains. First, in the US, there is a gap between the profits of brand-name drugs and generic drugs. Generic drugs are much less profitable. Second, as industrial costs in the US are relatively high, the production of generic drugs and APIs has been relocated substantially to other countries with a comparative cost advantage over the past few decades.

As some have pointed out, tariffs cannot solve the long-term problems facing the US pharmaceutical industry. Arthur Caplan, head of the division of medical ethics at NYU Langone Medical Center in New York City, said that it's unlikely that the tariffs will spur production in the US, as generic drugs aren't a lucrative enough business for companies to invest in the cost of building new manufacturing facilities, according to NBC News.

In this case, the tariffs would primarily drive up the import costs of generic drugs, APIs and other medical supplies, thereby increasing the financial burden on US patients. 

According to a report of the People's Daily, in 2017, China became the world's leading exporter of APIs. That year, China was home to nearly 5,000 enterprises involved in the production of APIs and pharmaceutical preparations. Among them, nearly 50 preparation enterprises were certified by European and US authorities, with the export value of pharmaceutical products exceeding $13.5 billion.

Over the past few years, China has further consolidated its position in the global pharmaceutical industry chain. While different organizations may vary in their calculations of China's share of US drug imports, it has become a general consensus that China's pharmaceutical industry has made steady progress. According to data shared by United States Pharmacopeia, a nonprofit group, China is increasingly playing a role in making APIs, NBC News reported.

Regardless of whether products are exported directly from China to the US, or whether APIs are exported to other countries for processing and manufacturing and then exported to the rest of the world, one thing is clear: there is a complex global supply chain, and China is an integral part of it. The additional tariffs on China's exports to the US, while having a limited impact on China, as they affect only a portion of China's overall exports, could have a significant impact on the US, potentially driving up the cost of generic drugs.

And generic drugs may be just one of many industries where additional tariffs could drive up the prices of goods in the US and increase the burden on US consumers. Economic studies of the impact of the additional tariffs Trump imposed during his first term between 2017 and 2020 suggest most of the economic burden was ultimately borne by US consumers, according to the BBC.

Over the years, China's supply chain has become increasingly competitive, and its position in the global industrial chain has been continuously consolidated. Through the global industrial chain, China's cost advantages are shared by consumers worldwide, including those in the US. Washington should take into account the interests of US consumers and reconsider its protectionist trade practices. 

The author is a reporter with the Global Times. [email protected]