Trade War scoreboard: Obesity drug imports balloon, China rare earth magnets plunge
This is a transcript, for the video found here:
Bullets:
US imports for weight loss and diabetes drugs blew out trade deficits in the first four months of 2025.
Pharmaceutical companies in Ireland and Switzerland loaded high-value obesity medications onto aircraft to meet surging US demand for the drugs, and to front-run higher tariffs on drug imports.
Rare earth magnets from China collapsed, down 93% from the previous year. The shortage of magnets is being strongly felt across advanced manufacturing sectors.
Report:
Good morning. The trade data are coming in for the first part of the year, and we can see how the tariffs and trade wars are shaking out. We’ll start in Ireland, which suddenly is now the source of the second-largest trade deficit. And it was a result of a perfect storm of soaring weight-loss drug demand, and the race to get these compounds into the US market before new tariffs get put on them.
$36 billion worth of hormones for weight loss and diabetes drugs, and these come in by plane. Going by ship takes too long, and the shipments are so light that air freight doesn’t cost much.
Here is a chart of trade deficits by country, and the balance of trade with Ireland and Switzerland jumped off the page—our deficit with Ireland more than doubled, and with Switzerland increased over four times in the quarter. And it’s almost all from pharmaceuticals. The Swiss economy had its best quarter in over two years, also to front-run US tariffs, and mostly on drug exports to the US.
Back to Ireland, which is a small country by population. Drugs are half of their exports to the US in the first part of the year, and almost all of those went to Indiana—that’s because that’s where Eli Lilly happens to be, and not because there are a lot more fat people in Indiana than anywhere else. Ireland’s economy to grow 10% in Q1. Sales of weight loss drugs in the US are booming, and analysts believe they’ll double this year, to $30 billion. Eli Lilly is the primary importer of these drugs for weight loss, and invested $800 million to expand their facility in Ireland to make drugs like Zepbound. And here we find another reason that Eli Lilly is so motivated to get that facility up and running, and put the drugs on airplanes instead of on ships: They can make a lot more money selling Zepbound in the US, than anywhere else.
The US price for Zepbound is over a thousand dollars a month. That is six times what they the drug sells for in Germany, France, or Holland, and ten times what patients in the UK will pay. But even at these far higher prices, drugmakers can’t make the drugs fast enough, for the American market. Novo Nordisk is the maker of Ozempic and Wegovy, and can’t keep up with demand. Lilly’s big expansion in Ireland helped them take market share from Novo as a result, and that is why this line went straight up:
Imports of peptides and other hormones from Ireland. For 2025, we’re only through April, and it’s already more than two times the whole of last year, which in turn was double again 2023’s number.
But another factor is that higher tariffs are probably coming for all these drugs—analysts expect those to come in anywhere from 25% up to 50%, and so the importers are getting them over as quickly as they can before the new tariffs hit.
So the US is suddenly importing a lot of weight loss drugs from Ireland, while importing a lot fewer rare earth metals and magnets from China. Year-over-year exports from China, to the world—were down 74% in May. It was the biggest decline on record. Exports of rare earth magnets to the US were down 93%. The effects of that are cascading now through the automotive, electronics, and defense industries.
This is Dalian, in Liaoning province. Be Good.
Resources and links:
Wall Street Journal, How Weight-Loss Drugs Blew Out the U.S. Trade Deficit
https://www.wsj.com/health/pharma/how-weight-loss-drugs-blew-out-the-u-s-trade-deficit-2d8c668c
China Flexes Chokehold on Rare-Earth Magnets as Exports Plunged in May
Reuters, Swiss economic growth surges as firms race to beat U.S tariffs
Lilly expands manufacturing footprint in Ireland with $1.8 billion investment
Harvard Business Review, How U.S. Tariffs Stand to Impact Prescription Drugs
https://hbr.org/2025/05/how-u-s-tariffs-stand-to-impact-prescription-drugs
Medscape, How Proposed Tariffs Could Disrupt US Drug Prices and Supply
https://www.medscape.com/viewarticle/how-proposed-tariffs-could-disrupt-us-drug-prices-and-supply-2025a1000ga0
Astounding, large trade deficits for weight drugs that always carry side effects and a reduction in magnets needed in manufacturing to offset. Is that MAGA?
I am curious why there is such a demand for obesity drugs in the USA. Are more people participating in the dating game, getting married or other reasons?
I can't imagine myself paying that kind of money for pharmaceuticals unless I needed those drugs.