How Will a Second Trump Term Impact the Life Sciences Sector?

On Monday, January 20, 2025, the second inauguration of Donald J. Trump as the 47th President of the United States took place and Trump took office.

In the nearly three months since January 20, Trump's policies have had various impacts. Trump has adopted controversial positions on many globally significant issues, and some have even suggested that his re-election signals the emergence of a "new world order".

Trump is known for being unpredictable and changing his policies frequently. Nevertheless, in this article, we will try to predict what the consequences of a second Trump term might be, directly or indirectly, for the life sciences industry.

Economic policy

The first Trump administration was characterized by a "trade war", with sanctions against China and China's response and retaliation. Trump then announced that he would impose additional tariffs on imports from Canada and Mexico, after which the trade agreement between the US and these two countries was revisited. Under Biden, Chinese tariffs were mostly maintained and detailed, and the trade war even took a new dimension with a ban on the export of certain technological products to China.

In the first three months of the second Trump term, tariffs were one of the most popular topics on the agenda. Trump's claim was that many countries were imposing unfair tariffs on the US and abusing the US by engaging with the US market only as an export market. Tariffs, according to Trump, will bring industrial production and manufacturing jobs back to the US and increase tax revenues. In the meantime, it is foreseeable that the volume of US imports will decrease with tariffs on certain countries (especially China, EU countries, Mexico and Canada) and certain products.

The direct impact of tariffs on the pharmaceutical sector

The pharmaceutical sector also appears to be one of Trump's targets. In February, Trump announced his decision to impose tariffs of "25% or more" on imported products in the pharmaceutical sector and to "significantly increase" these tariffs throughout the year. The announcement stated that the new tariffs would apply to the pharmaceuticals and automotive industries, and semiconductor chips used in the production of many electronic products.

Trump is particularly likely to impose tariffs on imports from India as of April 2. It is known that Indian government officials have requested that pharmaceutical products be excluded. It is also clear that the trade war between China and the US is a major obstacle for China-based pharmaceutical and raw material producers and to licensing and distribution agreements between them and American companies.

While there may be exceptions for India, given Trump and the Republican Party's "hawkish" stance on China, tariffs could pose a threat to the Chinese pharmaceutical and biotech sectors. In the case of China, exports to the US of chemicals used in the production of fentanyl, the drug that has killed thousands of people in the US, pose a major problem.

Some economists argue that products imported into the US market from countries such as China and India, where production costs are lower, reduce costs in the US economy, and that taxes on them will lead to more difficult conditions for consumers.

Moreover, the inability of companies from these countries to supply their products to critical markets such as the US could have larger consequences for the global pharmaceutical industry. For example, companies that manufacture their products or have them manufactured in India, China or the European Union may need to implement new production models. Across the industry, reciprocal tariffs could increase production costs, require investments in new production facilities, create economic inefficiencies or reduce profit margins. Following changes in the customs regime, some companies may turn to alternative markets rather than the US market. Demand for US products in other markets may decline and new opportunities may arise. On the other hand, there may be opportunities for American firms or firms producing in the US. Of course, it will take many years for new production facilities to be built, for them to become operational, and for the products produced there to obtain the necessary permits. All of this is likely to be reflected in consumer prices.

In addition, objections and legal proceedings are likely to be raised on the grounds that regulations increasing customs duties on a country or sector basis violate World Trade Organization agreements. Especially in the case of possible tariff increases in the pharmaceutical sector, it can be argued that the US violates the World Trade Organization 1994 Agreement on Trade in Pharmaceutical Products. For other products, existing free trade agreements may come under review and renegotiation of these agreements may also be in question.

Tax cuts

One of the most notable developments of the first Trump term was the tax cuts of 2017, which included reductions to many forms of taxes, and especially corporate taxes. The Trump administration's initial goal for tax reform was to reduce the corporate tax rate from 35% to 15%. The rationale behind this was that tax cuts would make it easier for companies to access capital and increase R&D activities. In 2017, the corporate tax rate was reduced from 35% to 21%. However, some economists and institutions such as the IMF have argued that the tax cuts have not led to the expected level of investment.

In his new term, Trump is expected to reduce the corporate tax rate from 21% to 15%. In particular, the Republican Party's control of both houses of the legislature (the Senate and the House of Representatives) may facilitate such attempts. In this case, the profitability of American companies may increase and more companies may choose the US as their headquarters. Again, the tax revenues foregone by lowering the corporate income tax could be replaced by increased customs tariffs.

Drug approvals, de-regulation

One of Trump's promises before he was first elected US president in 2016 was to cut red tape at the Food and Drug Administration (FDA) and speed up the approval process for medicines. In the first year of the first Trump administration, the number of new drugs approved by the FDA jumped from 22 to 46 in 2017, a record high. New approvals remained high thereafter, with 59, 48 and 53 new drugs being approved in the following years.

There are expectations that drug approvals will accelerate and increase in Trump’s new term. Expectations include a focus on rare diseases and gene therapies, a weakening of standards on environmental protection and sustainability, and a prioritization of US-based companies and products made in the US.

During the first Trump administration, the FDA was said to have taken a softer, more dovish stance in its oversight of the industry, issuing fewer new regulations and using warning letters and similar actions less frequently. During the first Trump administration, it was reported that the FDA used “warning letters” one-third less frequently, the FDA Center for Devices and Radiological Health issued warnings about the quality and safety of medical devices two-thirds less frequently, and FDA “official action indicated” reports were halved. The FDA's Center for Drug Evaluation and Research (CDER), which issued 19 warnings about inappropriate clinical trial practices under Obama, issued 7 warnings under Trump.

These developments led to the observation that the Trump administration was engaged in deliberate de-regulation. This, of course, led to political and legal debates. Some argued that de-regulation threatened public health, while others argued that faster and easier operation of US pharmaceutical companies would lead to better outcomes for both public health and commercial purposes. Similar developments are likely over the next four years.

Public health and access to healthcare services

Apart from these, there are many other developments on the agenda, especially those that will affect the American domestic market and American patients' access to health care. For example, while the Biden administration negotiated with pharmaceutical companies to lower drug prices through the Medicare program, it is not clear whether the Trump administration will continue this stance.

Trump has complaints that the costs of healthcare services are hidden from consumers, that they vary in different states, that price transparency is not ensured, and that consumers should have access to treatments at lower prices. Drug pricing reform is a bipartisan issue with consensus on both sides of American politics. Therefore, new regulations on drug pricing would not be surprising.

On his first day in office, Trump signed an executive order announcing America's withdrawal from the World Health Organization. In his justification for the decision, Trump stated that the WHO has failed to manage the COVID-19 pandemic well, failed to carry out the necessary organizational reforms, and that failed to be independent from WHO member countries. In particular, he emphasized that US payments to the WHO are excessive and disproportionate. Instead, US national agencies will create necessary organizations for public health and biosecurity. This development is likely to undermine international cooperation in the event of pandemics and weaken WHO's institutional capabilities in general.

Of course, a transition of political power can also lead to the politicization of critical issues such as access to healthcare. An example of this is the bans or restrictions of abortion by the Republican Party and especially some state governments. This issue was hotly debated during the first Trump administration, but Trump himself did not adopt a very radical stance on this issue and argued that abortion should be regulated at state level. In 2022, with the votes of conservative justices appointed by Trump to the Supreme Court, Roe v. Wade (1973), which found it unconstitutional for states to restrict the right to abortion (and thus protected the right to abortion), was overturned, paving the way for more restrictive regulations.

Competition law, data protection, anti-corruption

It can be said that US competition authorities adopted a stricter stance during the Biden administration between the two Trump administrations. During Biden’s term, the dominance of technology companies in particular was a subject of debate, the consolidation of companies such as Google and Microsoft in a wide range of fields drew reaction, and a stricter approach was adopted towards mergers and acquisitions. Republican politicians, on the other hand, argued that competition law and institutions were politicized during the Biden era and used to pursue goals such as climate change or DEI (diversity, equity and inclusion).

The Trump administration's appointments to the Federal Trade Commission and the Justice Department's antitrust division have signaled a continuation of Biden-era policies. However, the dismissal of two Democrat-appointed commissioners at the Federal Trade Commission in March raised doubts again. Moreover, the Trump administration is known to have close ties with the owners or executives of several tech giants. Vice President J.D. Vance's criticism of some European Union regulations, Trump and Meta CEO Mark Zuckerberg's comparisons of fines on American tech companies to tariffs, and Elon Musk's critique of EU policies result in the impression that Biden-era sensitivities have been set aside. Therefore, it is too early to say what will happen in the field of competition law.

It can be expected that the current tensions in US-EU relations will also be reflected in the field of data protection. Recently, Trump's request for the resignation of some Democratic members of the Privacy and Civil Liberties Oversight Board drew attention. The board's duties include monitoring the activities of US intelligence authorities and evaluating complaints from European authorities on data protection. These developments raised questions about the fate of the US-EU Data Privacy Framework Agreement, which was signed after long and contentious judicial processes. This agreement is the basis for many American companies to transfer EU citizens' data to the US. Developments in the field of data protection are likely to be part of the general unrest in US-EU relations.

Trump also signed an executive order temporarily suspending enforcement of the Foreign Corrupt Practices Act (FCPA) with the aim of enhancing global economic competitiveness of American companies and protecting national security. The ruling argued that the FCPA unnecessarily impedes American foreign policy objectives and hinders American businesses. During the 180-day temporary suspension of FCPA enforcement, the Trump administration will review and update existing policies and guidance, will not initiate new investigations, and will review and take appropriate action on existing investigations. The changes to the FCPA's enforcement will require companies to take a broader look at the compliance landscape.

International Relations

Last but not least, US international relations policy under the Trump administration will be another issue to watch carefully. The Biden administration had adopted a tough stance against Russia's invasion of Ukraine, provided military and humanitarian aid to Ukraine, and engaged in actions to weaken the Russian economy, imposing sanctions. These sanctions included freezing the assets of people linked to Russia and the Russian economy, banning the export of technologies that Russia could use in the production of weapons, or preventing the import of certain products from Russia. In the process, many “Western” companies exited the Russian market and some sold their assets to Russian individuals and companies. Those that tried to circumvent the sanctions regime began exporting to Russia through countries with weaker ties to the West.

Among his election promises, Trump said that he would achieve a ceasefire and peace between Russia and Ukraine within 24 hours of taking office. In the time that has elapsed since he took office on January 20, 2025, there have been no credible indications that a lasting peace will be achieved, but there have been attempts by the Trump administration to achieve a ceasefire, which Russia has not ruled out. The European Union, which is geographically much closer to the war zone, seems intent on supporting Ukraine and maintaining the sanctions regime that has weakened Russia. Nevertheless, the fate of the sanctions regime is uncertain, and American sanctions in particular may be lifted or eased. Products with humanitarian or medical/pharmaceutical purposes have been exempted from the current sanctions by many Western countries and can be exported to Russia with special permits. The easing of the sanctions regime could mean an opportunity for companies that have ceased their activities in the Russian market to return.

Laissez-faire

It remains to be seen what positions the Trump administration will adopt on all these issues, and how consistently it will maintain those positions. Nevertheless, it would be normal to expect significant changes both in the American system and in the post-World War II world order, which is intervowen by international institutions, treaties and intergovernmental relations.

The Trump world is a world where a lot can change in a day. Industries and companies will need to be more agile and more adaptable in this world, while at the same time being able to look at the bigger picture.

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