NewDelhi: US President Donald Trump has announced a phased tariff plan on imported generic medicines that could bring major changes to the international pharmaceutical supply chain and create new hurdles for India, the world’s largest supplier of generic drugs to the United States.
Under the new policy, the medicines imported into the United States will continue to face zero tariffs for the first two years from August 2026. After that period, tariffs will rise to 100 per cent for one year and then increase further to 200 per cent, Trump said.
The move is aimed at encouraging pharmaceutical companies to move production to the United States. India, which supplies a large share of generic medicines consumed in America, is expected to be among the countries most affected by the policy.
Trump’s plan to bring drug manufacturing back to US
Announcing the decision on his Truth Social, the US president said the tariff structure is intended to push companies towards building pharmaceutical manufacturing facilities within the United States.
“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,” he 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 said the policy will protect American consumers and strengthen domestic drug production.
“The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as is,” he said.
Why Trump’s generic drug tariffs could hit India’s pharma sector
India has built a strong position in the global generic drug market and is described as the “pharmacy of the world”. The country supplies affordable medicines to several markets, including the United States, where Indian companies account for nearly 40 per cent of generic medicines by volume.
According to the Global Trade Research Initiative (GTRI), India exported pharmaceuticals worth $9.7 billion to the United States in the financial year 2024-25. The US market made up a major part of India’s overall pharmaceutical exports, which stood at $25.8 billion in the same financial year.
Indian-made generic medicines are used by American patients on large scale for several health conditions, including diabetes, high blood pressure, cancer, depression, infections and mental health-related illnesses.
The impact of the proposed tariff structure on Indian pharmaceutical companies is still being assessed. The final outcome will depend on how the policy is implemented and whether exemptions or trade arrangements are introduced.
Trade deal adds another layer
The tariff announcement comes months after India and the United States reached a trade agreement in February, under which New Delhi secured negotiated outcomes related to generic pharmaceuticals and pharmaceutical ingredients.
However, apprehensions over possible restrictions on drug imports have continued in recent years, with Indian companies keeping a watch on Washington’s approach towards overseas pharmaceutical suppliers.
A major challenge for healthcare markets is the role Indian firms play in keeping medicine costs affordable in the United States. A report by the Financial Post said that around 65 per cent of birth control pill prescriptions in America in 2024 were manufactured by two India-based companies, Glenmark Pharmaceuticals Ltd and Lupin Ltd.
US push for domestic production
The Trump administration has argued that greater domestic manufacturing will strengthen America’s pharmaceutical security and reduce dependence on foreign suppliers.
Indian drug makers may need to reassess production strategies, investment decisions and supply chains after the new tariff plan. Companies could evaluate whether setting up manufacturing units in the United States becomes necessary to maintain access to one of their biggest export markets.
India’s drug industry has dealt with trade-related hurdles in the past, but the proposed tariff levels have turned this into a major issue for companies that supply medicines to millions of patients around the world.
Bureau Report
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