Trump Tariffs Spur Manufacturing Boom in Puerto Rico
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President Donald Trump’s “America First” tariff policies are boosting manufacturing in Puerto Rico, an island he has both attacked and claimed to help more than any other U.S. leader.
Drugmaker Millicent Pharma on Aug. 20 is announcing plans to begin production in Fajardo, on Puerto Rico’s eastern coast. At least seven manufacturers have either set up shop or expanded their operations in the U.S. territory since Trump took office and rolled out tariffs on foreign goods, according to government data.
“We have multiple companies choosing Puerto Rico because we are American manufacturing, we are made in the U.S.A., and that automatically liberates them from tariffs,” Governor Jenniffer Gonzalez said in an interview.
Gonzalez, a Republican, has leaned into Trump’s tariff policies, issuing executive orders aimed at luring foreign manufacturers to the island of 3.2 million. The companies opening or expanding there have committed to investing more than $220 million and creating at least 1,600 local jobs, according to her office.
“These are companies that want access to the U.S. market,” Gonzalez said.
The manufacturing bump is welcome news for an economy that is expected to barely grow this year as it recovers from hurricanes, bankruptcy and a brain drain.
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Despite Puerto Rico’s reputation as a tropical getaway, manufacturing remains the island’s economic engine, representing about 43% of gross domestic product. It’s the second-largest producer and exporter of pharmaceuticals in the U.S. Tourism, in contrast, accounts for just 2% of the territory’s economy.
Trump has had a testy relationship with Puerto Rico, tying up aid in the wake of 2017’s Hurricane Maria and accusing local leaders of corruption. But the billions he pledged toward recovery, he said, made him “thebest thingthat ever happened to Puerto Rico.” More recently, he fired all but one member of an oversight board that has been trying to resolve the bankruptcy of the island’s electric utility — a move seen as a win for bondholders at the expense of residents.
Millicent, headquartered in Northern Ireland, has committed to investing $45.5 million in Puerto Rico and creating at least local 73 jobs over the next five years. Frank Rodriguez, president of the company’s Puerto Rico operations, said Millicent decided to move manufacturing of its feminine contraceptive products from Canada to Puerto Rico before Trump began rolling out tariffs. But the levies, he said, could help Millicent win business from other pharmaceutical companies that don’t have their own U.S. plants.
“There are companies around the world that are looking to manufacture in the U.S., and our facilities in Puerto Rico might give them that opportunity,” he said. “That’s something we’re exploring.”
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Pharmaceutical companies originally flocked to the island in the 1960s and 1970s to take advantage of a provision exempting them from paying federal taxes on their Puerto-Rico based profits. While that perk was phased out starting in the 1990s, the territory created new incentives to keep its industrial base. Qualified companies pay a 4% corporate income tax, no federal tax and are eligible for lucrative refunds on backup power generation, research and development, said Sebastian Negron, the island’s secretary for economic development and commerce.
In addition, its universities pump out more than 20,000 STEM graduates per year. “This is a workforce that’s bilingual, U.S.-trained and knows about quality manufacturing in an environment that follows all FDA regulations,” Negron said.
Rodriguez, with Millicent, said it was the ability to scoop up experienced talent — along with a ready-made manufacturing plant — that made the move so attractive. The 150,000 square-foot facility Millicent will occupy has been making pharmaceuticals for more than five decades and even has its own backup diesel generators for use in blackouts, Rodriguez said.
“It’s gone through hurricanes and all sorts of challenges, and it’s still running,” he said.
