US President Donald Trump has proposed a phased plan to introduce tariffs on imported generic drugs, which could reach 200% by 2028, aiming to stimulate American production. This move is significant for the Indian pharmaceutical industry and bilateral trade.
Under the proposal, generic medicines imported into the US will be subject to zero tariffs for two years, starting August 1st. After this, the zero-tariff period will be extended for another year, after which the rate will increase to 100%, eventually reaching 200% in August 2029. This phased structure is intended to give pharmaceutical companies time to relocate manufacturing capacity to the US before punitive duties take effect.
Trump stated in a post on Truth Social that this measure aims at 'bringing generic drug manufacturing back to America,' penalizing companies that fail to build factories and equipment within the specified period.
This announcement is part of Trump's broader strategy to bring pharmaceutical manufacturing back to the US and reduce dependence on foreign supply chains. According to Trump, the policy's goal is to protect US citizens, while policies regarding patented, branded, and innovative drugs will remain unchanged.
Trump has repeatedly argued that the US pays significantly more for medications than many other countries and has sought to address accessibility issues by reforming the pharmaceutical sector. This issue has gained political importance ahead of the 2026 US midterm elections. Previously, in April 2025, his administration initiated an investigation under national oversight of pharmaceutical imports according to Section 232 of the Trade Expansion Act. In April of this year, Trump signed an executive order tightening tariffs to 100% on imported branded pharmaceutical products, provided manufacturers agree to government price agreements or commit to producing in the US.
The immediate impact on Indian pharmaceutical exports is likely to be limited due to the proposed two-year tariff-free period. This transition period allows Indian manufacturers to review their supply chains, export strategies, and potential investments in US production. However, the projected increase to 100% and ultimately 200% tariffs could eventually affect Indian exporters who do not establish a local manufacturing base.
India is one of the largest suppliers of generic drugs to the US. Pharmaceuticals account for one of India's top three exports to the United States, amounting to $10.5 billion in 2024-25, according to government data. Indian generics constitute nearly 40% of volume prescriptions in the US market, making the sector particularly vulnerable to sharp tariff increases.
India is also a leading supplier of finished generic dosage forms to the American market. Analyses based on data from the US Food and Drug Administration and trade data estimate that Indian manufacturers provide about 40-50% of total generic prescriptions in the United States. Thus, the proposed tariffs could significantly affect India's pharmaceutical exports if companies do not localize production.
According to Bloomberg, it remains unclear what portion of Trump's proposed tariff burden Indian pharmaceutical companies will ultimately face. Drug tariffs could negatively impact over 40% of India's exports to the US. Previous threats by Trump also jeopardized several commonly prescribed drugs from India, including contraceptives and medications for hypertension and depression. Regarding birth control pills, Bloomberg reported that approximately 65% of prescriptions filled in the US in 2024 were produced by two Indian manufacturers—Glenmark Pharmaceuticals and Lupin.
The pharmaceutical sector is also facing broader trade uncertainty. Jamieson Green, a representative of the US Chamber of Commerce, indicated that the Trump administration may soon introduce new trade measures against about 60 economies, including India, on allegations related to forced labor imports. Washington has proposed an additional 12.5% tariff on imports from India as part of this investigation, although a final decision has not been announced.
Beyond pharmaceuticals, Trump's tariff measures have put pressure on several export-oriented sectors in India. Labor-intensive industries such as textiles and apparel, precious metals and jewelry, leather and footwear, chemicals, engineering goods, and auto components remain most vulnerable due to their reliance on the US market.
According to a Times of India report, although exporters noted increased demand from American buyers in recent weeks, uncertainty regarding potential US tariff measures has delayed the signing of firm orders. Buyers have postponed purchases pending greater clarity on Washington's trade policy. It is reported that sectors including chemicals, textiles, carpets, and leather have attracted greater interest from US buyers, though this has not yet resulted in significant contracts.
Government data showed that India's exports to the US decreased by 1.21% year-on-year to $8.17 billion in June, while imports rose by 33.86% to $5.5 billion.
India and the US have been negotiating a bilateral trade agreement for several months as both countries seek to deepen trade and investment ties. These negotiations have gained more significance amid expectations of new US tariff announcements at the end of this month.
The government recently informed Parliament that it is closely monitoring all developments and continuing engagement with the US administration. India's Minister of Commerce and Industry, Piyush Goyal, held high-level meetings with US Chamber of Commerce representative Jamieson Greer regarding a comprehensive trade agreement. Although Goyal dismissed reports that India was waiting for better terms, he emphasized that India and the US are actively negotiating, and New Delhi will not concede on its core interests in any trade pact.
In February, Trump announced a temporary trade agreement with India that eased tariff tensions by lowering US rates on Indian goods from an effective 50% to 18%. The agreement also suspended a proposed additional 25% tariff related to India's purchases of Russian oil and reduced mutual tariff rates from 25% to 18%. In return, India agreed to lower or eliminate tariffs on a range of American industrial, agricultural, and consumer goods, with both sides committing to continue negotiations on a broader bilateral trade agreement.
Later, the mutual tariffs ceased to apply following a US Supreme Court ruling on February 20th, which invalidated them. Nevertheless, a 10% tariff remains in place on certain goods from all countries under Section 122 of the US Trade Act of 1974.
President Donald Trump stated in a social media post on Tuesday that generic manufacturers will be given two years to relocate production to the United States, otherwise they will face a 100% import tariff set to take effect in August 2028. One year later, in August 2029, this levy will double to 200%.
According to Trump, this measure aims to bring pharmaceutical production back to America, imposing a penalty on companies that fail to build factories and equipment within the specified timeframe. Trump is using the issue of drug costs as a key factor causing concerns about accessibility, especially ahead of the 2026 midterm elections.
He has long criticized price disparities between consumers in the US and international markets and has repeatedly sought to narrow this gap. The administration also launched a drug discount platform for consumers, which it named TrumpRX. The President insisted that pharmaceutical companies produce more medications in the US. In April 2025, the administration began an investigation into this industry based on national security under Section 232 of the Trade Expansion Act.
Trump clarified that his administration's plans regarding patented drugs will remain unchanged. This plan includes tariffs up to 100% on certain imported medicines, although with several major exceptions. Most of the world's largest drug manufacturers, including Merck & Co. and Eli Lilly & Co., avoided these punitive measures by reaching agreements with the administration.
Generic manufacturers find themselves in a more difficult position. Unlike patented drug manufacturers, they operate on minimal margins and rely on global supply chains, which makes absorbing tariffs challenging. Richard Seinor, CEO of Sandoz Group AG, one of the world's largest generic producers, warned last year that America's shift toward high tariffs would likely lead to increased drug prices and restricted patient access.
The Swiss company Sandoz Group AG, along with competitors Teva Pharmaceutical Industries Ltd. and Viatris Inc., copies branded drugs after patent expiration. It manufactures many of its generics outside the US, with plants in Canada and Austria. Among US trade partners, this blow will most significantly affect India, which is the largest exporter of generics to the US. Pharmaceuticals account for three of India's main export goods to America, valued at $10.5 billion in 2024-25, according to the country's Ministry of Commerce.
The drug tariffs could negatively impact over 40% of India's exports to the US, adding to existing duties on steel, aluminum, and automobiles. However, it was not immediately clear what volume of the new tariff Indian pharmaceutical companies would have to pay, as the bilateral trade pact signed in February stipulated that India would 'receive agreed results regarding generic pharmaceuticals and ingredients.' Previously, Trump's threats to impose tariffs on pharmaceutical imports jeopardized cheap supplies from India, particularly for hypertension and depression treatments, as well as oral contraceptives, according to an analysis by Bloomberg News based on data from the firm Symphony Health.
Regarding contraceptives, the analysis showed that about 65% of all prescription pill prescriptions in the US in 2024 were produced by only two Indian companies: Glenmark Pharmaceuticals Ltd. and Lupin Ltd. It is also worth noting that the White House is working on replacing Trump's emergency tariffs after the Supreme Court ruled them illegal earlier this year. The overall 10% tariff expires on Friday, and the administration is expected to impose duties on products from dozens of trading partners by the end of the week, citing allegedly weak labor standards.
