Former U.S. President Donald Trump has indicated that he plans to add a "major" tariff on imported medicines, which could bring severe consequences for Indian pharma manufacturers. India, the source of a large part of generic drugs to the U.S., could have its biggest export sector under higher scrutiny and pressure on costs in the event the new policy is implemented.

Key Highlights

Proposed Tariff On Pharma Imports

• Trump announced the plan at a National Republican Congressional Committee dinner, citing the requirement to return pharma manufacturing to the U.S.

• The new tariff will likely be imposed through Section 232 authorities, although no formal investigation has yet started.

• Trump is seeking to impose tariffs on like those already put on steel, aluminum, and cars.

Impact On Indian Pharmaceutical Exports

• India shipped $12.72 billion worth of pharmaceuticals to the U.S. in 2024, making it the nation's leading industrial export category.

• Indian medicines comprised 40% of U.S. prescriptions in 2022, saving the U.S. healthcare system $219 billion alone that year.

• Indian generics saved the U.S. more than $1.3 trillion over the past decade (2013–2022).

Concerns For Indian Industry

• Industry analysts caution that tariffs would undermine India's price competitiveness in the U.S. market.

• Increased import tariffs can raise the cost for Indian firms and upset the supply of low-cost generics.

• The U.S. recently levied a 26% reciprocal tariff on Indian products over current import tariffs.

Broader Economic Context

• Trump also warned Taiwan's TSMC with a 100% tax if it fails to set up local production.

• He condemned the Biden administration's $6.6 billion subsidy to TSMC's Arizona plant as unnecessary.

Quotes from Leaders or OfficialsDonald Trump, Former U.S. President
"We're going to be announcing shortly a tremendous tariff on drugs. After we do that, they're going to flood back into our country, because we're the large market."Industry Observations
"If this plan is implemented, it can significantly raise operating expenses for Indian pharma exporters and reduce their market share in the U.S.," said a trade analyst.With Indian generics constituting the bedrock of low-cost healthcare in America, Trump's suggested tariffs may destabilize pharma supply chains across the globe and economic diplomacy. As the dynamics of the 2024 election shape up, India's pharma exporters will be closely observing.