The United States has announced steep tariffs on imported generic drugs beginning in August 2028. President Donald Trump declared that the measure was intended to onshore production of pharmaceutical products and reduce reliance on foreign suppliers.

The move is expected to have significant consequences for India, which is the largest exporter of generic drugs to the US.

Trump explained on his Truth Social platform that the phased tariff plan would start on 1 August 2026. For the first two years, generic drugs entering the US would continue to face zero per cent tariffs. In the third year, tariffs would rise to 100 per cent, and from the fourth year onwards they would be set at 200 per cent.

He emphasised that this policy was designed to re-shore pharmaceutical manufacturing into America and penalise companies that failed to establish plants and equipment domestically within the given timeframe.

The president stated that the objective of the policy was to protect the American people. He clarified that the existing policy on patented, branded, or innovative drugs, which he described as successful, would remain unchanged. The new tariffs would apply only to generic medicines.

India, often described as the pharmacy of the world, supplies generic medicines to countries across the globe. In the United States, Indian generics account for nearly 40 per cent of the market by volume. 

During the financial year 2024–2025, India exported pharmaceuticals worth 9.7 billion US dollars to the US, representing 38 per cent of its total global pharmaceutical exports of 25.8 billion US dollars, according to a Global Trade Research Initiative report.

It remains unclear how Trump’s tariff plan will affect Indian drug companies, especially given the trade pact signed between India and the US in February. That agreement stipulated that India would receive negotiated outcomes with respect to generic pharmaceuticals and ingredients.

However, Trump’s earlier threats to impose tariffs on pharmaceutical suppliers had already raised concerns about the future of cheap supplies from India.

Indian generic medicines are widely prescribed in the US for conditions such as hypertension, depression, diabetes, cancer, infectious diseases, and mental health. In the case of birth control, approximately 65 per cent of all pill prescriptions in the US in 2024 were manufactured by just two Indian companies, Glenmark Pharmaceuticals Ltd. and Lupin Ltd., according to a Financial Post report. 

The new tariffs could therefore have far-reaching implications for affordability and access to essential medicines in the United States.

The announcement comes at a time when India’s pharmaceutical sector has been expanding its global footprint, with strong exports and a reputation for reliable supply chains.

Analysts suggest that the tariffs could disrupt this dynamic, forcing Indian companies to reconsider their strategies and possibly invest in manufacturing facilities within the US to maintain market access.

The broader impact on global healthcare supply chains and affordability of medicines remains a pressing concern.

Agencies