A tariff meant to pull biotech manufacturing and research back to the U.S. could push the smallest drug developers the other way, according to Michael Froman, president of the Council on Foreign Relations and former U.S. Trade Representative, who spoke to CNBC on September 28, 2026. His remarks came as an aside in a clip about the president’s rejection of Iran’s proposal to reopen the Strait of Hormuz. A Wall Street Journal opinion piece published September 27 ran under the headline “The U.S. Tariff Attack on U.S. Biotech.”
Froman’s China Figure Arrives Without a Methodology
Froman’s central claim: “We’ve seen really a very significant shift in biotech innovation to China over the last 5 or 10 years. Now they are producing 30 or 40% of the major innovations in this area.”
He gave no source or methodology. The range signals how seriously trade veterans view China’s shift from licensing drug candidates to developing them.
Why Company Size Decides Who Absorbs the Cost
Froman’s mechanism centers on leverage. Large pharmaceutical companies can offset tariff costs by negotiating drug price discounts across broad portfolios. A small biotech with one or two candidates has nothing to put on the table, facing the tariff bill directly and pressure to move manufacturing overseas.
He also argued that clinical trials are cheaper to run in China and that firms there avoid obstacles U.S. developers face, creating risk in using tariffs to bring manufacturing and research home.
Independent reporting supports the small-company pressure point. euractiv reported in January 2026 that small pharma companies were bracing for the impact of the administration’s pricing policy.
Pharma Tariffs Have Been Building for Months
The section framed high tariffs as taking effect the day after the interview, applying to a biotech manufacturing input tariff. A broader pharmaceutical tariff regime is already in place.
Clinical Leader published on pharma tariff impacts in February 2026. BioProcess International reported in April 2026 that the president imposed tariffs on pharma to boost U.S. drug manufacturing. In July 2026, CodeBlue reported that a U.S. 100% tariff on generic drugs may hit Malaysian producers hard.
Global Drugmakers Are Pouring Billions Into Their U.S. Presence
Reuters reported in August 2026 that global drugmakers are investing billions to boost their U.S. presence, the policy’s intended effect.
Froman’s warning targets smaller firms without pricing leverage, while large drugmakers have capital to build domestically. For investors, this distinction separates large players from early-stage developers whose cost structures and trial locations deserve scrutiny.
Washington Agrees on the China Risk
Latham & Watkins reported at the end of December 2025 that the BIOSECURE Act became law, limiting grants involving biotechnology companies of concern. The Coalition for a Prosperous America reported in March 2026 that a House hearing found solid agreement on China risks in the American prescription drug supply.
What Would Settle Froman’s Warning
Froman’s claim is testable over time. If smaller biotech firms move research and trials abroad while large manufacturers expand U.S. capacity, his asymmetry argument holds. Useful signals include where small developers disclose new trial sites and manufacturing partners in their filings.