US President Donald Trump said on Tuesday that generic drugs imported into the United States will continue to face a 0% tariff for the next two years, starting August 1. 

After the two years end, the tariff will rise to 100% for one year. After that, the tariff will increase further to 200%. 

Trump said the move is aimed at bringing generic drug production back to the United States and encouraging drug companies to set up manufacturing plants in the country. 

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“This is done in order to RESHORE Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them,” Trump said in a post on Truth Social. 

Trump wants more drug production in the US 

Trump has been pushing drugmakers to reduce the prices of medicines in the US through his most-favoured-nation drug pricing policy. The policy seeks to bring US drug prices closer to what people pay for the same medicines in other high-income countries. 

Generic medicines make up more than 90% of all medicines sold in the US, according to the US Food and Drug Administration.

Trump said the new tariff plan will not change the policy for patented, branded or innovative drugs.

India is a major supplier of generic drugs to the US 

The new tariff plan could have a major impact on India, which is one of the biggest suppliers of generic medicines to the US. 

India is the leading supplier of finished generic drugs, also known as formulated dosage forms, to the American market. Multiple analyses and reports based on US Food and Drug Administration and trade data estimate that Indian drugmakers account for around 40% to 50% of generic prescriptions filled in the US. 

China, meanwhile, plays a major role in another important part of the drug supply chain. It is the world’s biggest producer of active pharmaceutical ingredients, or APIs, which are the key ingredients used to make medicines. 

Drugmakers have already made deals with US government 

The world’s biggest drug companies signed agreements with the US government last year that protected billions of dollars worth of medicines from tariffs.

In April, Trump had signed an executive order that imposed 100% tariffs on branded pharmaceutical products imported into the US. The tariffs could be avoided if drugmakers agreed to government-backed drug pricing deals or promised to manufacture their products inside the country.

The latest move on generic drugs is part of Trump’s wider push to bring more pharmaceutical manufacturing to the US and reduce the country’s dependence on medicines made overseas. 

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Trump’s 10% global tariff faces a new deadline

The announcement also comes as the Trump administration prepares for another round of tariff action against countries around the world. 

A temporary 10% global tariff imposed by the Trump administration is due to expire on Friday. According to a Financial Times report, the US is preparing to announce fresh tariffs on dozens of countries as soon as this week. The new duties are expected to be similar in size to the existing 10% tariffs, although the administration is also looking at legal options that could allow it to impose even higher tariffs. 

The Trump administration is also preparing new trade action under Section 301 of the Trade Act over concerns about forced labour. The move comes after the US Supreme Court struck down Trump’s temporary 10% global tariff earlier this year, pushing the administration to look for other legal routes to impose tariffs.

Brazil has already faced new US tariffs, with some of its products hit by 25% duties.