US to impose up to 200 pwr cent tariff on generic drugs; India's pharma sector to be hit

US President Donald Trump has announced a steep tariff plan on imported generic drugs, set to take effect starting in 2026. Under the new policy, generic drugs entering the US will face zero tariffs for two years beginning 1 August 2026. Following this period, a 100 per cent tariff will be imposed for one year, escalating to 200 per cent thereafter.

This move aims to boost domestic pharmaceutical manufacturing by encouraging foreign companies, including India’s leading pharma firms, to establish production facilities within the US. Trump highlighted that these measures will protect American citizens and support unprecedented growth in US-based pharma manufacturing.

Importantly, tariffs will not apply to patented, branded, or innovative drugs under current policies. However, earlier in April, a 100 per cent duty was imposed on imported branded drugs unless manufacturers agreed to a government-backed pricing framework or moved production to the US.

India, known as the “pharmacy of the world”, is the largest global supplier of generic medicines and accounted for $9.7 billion in pharmaceutical exports to the US in 2025—38 per cent of its total pharmaceutical exports worldwide. The new tariffs risk significantly impacting these exports and may force Indian pharma companies to explore setting up US manufacturing units or diversify markets.

Trade tensions remain unresolved, with recent attempts to finalise a trade agreement between India and the US stalling over key Indian demands. The tariff announcement adds pressure amid ongoing negotiations.

This policy could reshape India’s pharmaceutical industry landscape and its exports to the US, underscoring the need for strategic adjustments in the coming years.