US President Donald Trump has announced a phased tariff plan on imported generic medicines, a move that could have significant implications for India’s pharmaceutical industry. India is the largest supplier of generic drugs to the United States, making the policy closely watched by drug manufacturers and exporters.
The announcement outlines a gradual increase in tariffs over the next few years, with the administration saying the measure is intended to encourage pharmaceutical manufacturing within the US.
Trump unveils phased tariff plan for generic medicines
In a post on his Truth Social platform, Trump said the new policy will take effect from August 1, 2026. Under the plan, imported generic medicines will continue to attract a zero per cent tariff for the first two years. The rate will then increase to 100 per cent for one year before rising to 200 per cent thereafter.
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“Effective August 1st, 2026, all generic drugs being brought into the United States will continue to have a tariff of zero percent for two years, after which the tariff will be raised to 100 per cent for one year, and 200 per cent thereafter,” Trump wrote.
“This is done in order to RESHORE generic pharmaceutical production into America, with a penalty to those companies that decide not to build plants and equipment within the stated period of time given to them,” he added.
Trump also said the decision is aimed at safeguarding Americans.
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“The objective of this policy is to protect the people of the United States,” he said.
“The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as is.”
Why India’s pharmaceutical industry is watching closely
India has long been known as the “pharmacy of the world” because of its large-scale production and export of affordable generic medicines. The United States remains its biggest overseas market.
According to a Global Trade Research Initiative report, Indian pharmaceutical exports to the US stood at USD 9.7 billion in the financial year 2024-25. That accounted for 38 per cent of India’s total global pharmaceutical exports, valued at USD 25.8 billion.
Indian companies also play a major role in the US healthcare system. Generic medicines made in India account for nearly 40 per cent of the drugs sold by volume in the American market. These medicines are commonly prescribed for conditions including diabetes, hypertension, depression, cancer, infectious diseases and mental health disorders.
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A Financial Post report noted that in 2024, around 65 per cent of all birth control pill prescriptions in the US were manufactured by two Indian drugmakers, Glenmark Pharmaceuticals Ltd. and Lupin Ltd.
Impact on Indian drugmakers remains uncertain
While the tariff roadmap has been announced, its exact impact on Indian pharmaceutical companies remains unclear.
India and the US had reached a trade agreement in February under which India was expected to receive negotiated outcomes related to generic pharmaceuticals and pharmaceutical ingredients. How the newly announced tariff structure will align with that understanding is yet to become clear.
The latest announcement comes as global pharmaceutical companies assess the potential impact of higher import duties on supply chains and exports to the US market.
FAQs:
Why is Trump imposing up to 200% tariffs on generic drugs?
Trump said the phased tariffs are intended to encourage generic drug manufacturing in the US and reduce reliance on imports.
How could Trump’s generic drug tariff affect India’s pharma industry?
India, a major supplier of generic medicines to the US, could face challenges if higher tariffs increase the cost of exports.
