Even as the US president Donald Trump slapped an additional 25% tariffs on Indian exports to the US, he has also hinted at a fresh set of tariffs on pharmaceutical and semiconductor imports “within the next week or so”. On Tuesday, Trump said that the US administration will put “small” tariffs on pharma imports initially, and raise them to 150% and finally to 250% in 1-1.5 years because he wants pharma manufacturing to shift to the US.
Though the domestic pharma players remain unfazed by the recent threat. A spokesperson for leading pharma association told FE that it will be difficult for the Indian companies to absorb extra cost due to the tariffs. “While the immediate tariff rates on pharma still remains unclear, it would be difficult for the domestic companies to sell drugs at higher cost. We will be shifting our focus on other regions. More than Indian companies, the US consumers will be affected the most because no other country can provide the generics drugs to the US at India’s price and scale,” he said.
Trump tariffs’ impact on medicines
Bhavin Mukund, vice chairman of Pharmexcil said that a tariff rate of this magnitude must carefully consider its impact on patient access to affordable and quality medicines. “India has long been a trusted and reliable supplier of essential drugs globally, including to the US, and we remain committed to constructive engagement with stakeholders to ensure uninterrupted, resilient supply chains that balance healthcare needs with trade objectives,” he said.
On August 1, when US imposed 25% tariffs on Indian imports, the pharma sector was kept out its purview but the latest statement have raised fresh concerns.
Who is going to meet the US demand for drugs?
“The US is constantly facing drugs shortage. High tariffs are going to exacerbate the situation and render the US consumers helpless. Even if a domestic manufacturer plans to shift their manufacturing to the US, it will still take at least 2-3 years to set up a facility. Since no other country has the capacity to produce generics at a large scale – except China which is already facing strategic issues with the US – who is going to meet the US demand,” said the pharma association official quoted above.
India’s pharma exports stood at over $30 billion in FY25 with over a third went to the US. In volume terms, Indian accounts for about 40% of US generics imports.