Trump's 100% Pharmaceutical Tariffs: Potential Impact on India's $8.7 Billion US Drug Exports

US President Donald Trump and Indian Prime Minister Narendra Modi convened in Washington, DC, on February 13, 2025.

Washington:

US President Donald Trump announced on Thursday tariffs reaching up to 100 per cent on imported branded and patented pharmaceutical drugs, effective October 1, 2025. This decision could significantly affect India's pharmaceutical sector, which heavily relies on trade relations with America.

"Starting October 1st, 2025, we will be imposing a 100 per cent Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America," the Republican leader declared on Truth Social.

Trump's statements demonstrated his continued commitment to tariffs beyond the trade frameworks and import taxes initiated in August, reflecting his confidence that such taxes will help decrease the government's budget deficit while boosting domestic manufacturing.

"'IS BUILDING' will be defined as, 'breaking ground' and/or 'under construction.' There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started. Thank you for your attention to this matter," he further clarified.

In this latest round of tariffs, Trump also imposed 50 per cent duty on kitchen cabinet and bathroom vanity imports, 30 per cent on upholstered furniture, and 25 per cent on heavy trucks.

While Trump provided no legal justification for these tariffs, he appeared to extend his authority as commander-in-chief by claiming the taxes were necessary "for National Security and other reasons."

How Could India Be Impacted?

America serves as India's largest export destination for pharmaceutical products. During FY 24, India exported pharmaceutical goods worth $27.9 billion, with 31 per cent or $8.7 billion (Rs 77,138 crore) directed to the US, according to the Pharmaceuticals Export Promotion Council of India. An additional $3.7 billion (Rs 32,505 crore) worth of pharmaceutical products were exported in just the first half of 2025.

Reports indicate that India supplies over 45 per cent of generic and 15 per cent of biosimilar drugs used in the US. Companies such as Dr Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma reportedly generate between 30-50 per cent of their total revenues from the American market.

While the new American tariffs appear primarily targeted at branded and patented drugs—a segment dominated by multinational corporations—uncertainty persists regarding whether complex generics and specialty medicines from India would also be affected. Additionally, many large players already maintain manufacturing facilities in the US.

American consumers rely on affordable generic drugs manufactured in India. Higher tariffs would result in price increases, inflation, and potential drug shortages in the country. Meanwhile, Indian companies operating with slim margins in the US generics market may struggle to absorb additional costs if tariffs are imposed on them, potentially transferring these costs to US consumers or insurance providers.

Trump has previously imposed 50 per cent tariffs on Indian imports, which includes a 25 per cent 'penalty' for India's continued purchase of Russian oil.