US President Donald Trump signed an executive order that could impose tariffs of up to 100% on certain imported medicines if companies do not reach agreements with his administration within the next few months. The measure was reported by Bloomberg on Thursday.
The White House said the levy applies to patented drugs made in countries without tariff deals with the US, where companies also lack most-favoured-nation pricing agreements with the administration. Tariffs on products from some larger companies would begin in 120 days, while items from smaller manufacturers would start after 180 days.
How Tariffs Work
Tariffs are customs duties charged on imported goods, either on specific items or categories of products. They are used to make local producers more competitive by giving imported goods a price disadvantage, and are often used alongside trade barriers and import quotas.
Tariffs are paid by importers at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individuals and businesses, while tariffs are paid by importers.
During the 2024 election campaign, Trump said he would use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada made up 42% of total US imports, and Mexico exported $466.6 billion to the US, according to the US Census Bureau.
Looking back to late 2025, we saw the administration introduce an executive order targeting imported medicines with potential tariffs. Those deadlines, 120 days for larger firms and 180 for smaller ones, are now fast approaching in April 2026. This creates a clear window of uncertainty and opportunity for the next several weeks.
Market Implications For Investors
We should anticipate increased volatility in the healthcare sector, particularly in ETFs like the XPH. A recent industry report shows that 35% of U.S. brand-name drugs originate from facilities in Ireland and Germany, making companies with heavy exposure there vulnerable. Traders could look at buying puts on these specific firms or purchasing call options on domestic manufacturers who stand to gain market share.
This is not just a healthcare story; it is an inflation story that could impact the entire market. The last time we saw significant tariff escalations back in 2018, the VIX volatility index jumped over 40% in a single quarter. Considering the March 2026 Consumer Price Index showed inflation stubbornly above the Fed’s target, we are looking at call options on the VIX to hedge against a broader downturn.
We are also closely watching currency markets, especially the Mexican Peso and Canadian Dollar. Recalling the campaign rhetoric from 2024, these nations were highlighted as primary targets for broader tariff actions. Since U.S. imports from Mexico hit a record $475 billion in 2025 according to the latest Census Bureau data, any sign of this policy expanding could weaken the Peso, making options on the USD/MXN pair a key focus.
