US imposes sweeping tariff on imported pharmaceuticals
United States President Donald Trump on Friday announced that his administration will impose a 100 per cent tariff on all branded and patented pharmaceutical products starting October 1, 2025, unless manufacturing companies establish production facilities in the United States. The announcement comes as a major challenge for India’s pharmaceutical industry, which supplies over 50 per cent of global vaccines and nearly 40 per cent of generic medicines to the US.
Trump, in a post on Truth Social, clarified that companies which have already begun constructing plants in the US will be exempt from the tariff. He defined the term ‘IS BUILDING’ as either ‘breaking ground’ or ‘under construction.’
“Starting October 1st, 2025, we will be imposing a 100 per cent Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump wrote.
The US President also announced tariffs on other imported products, including 50 per cent on kitchen cabinets and bathroom vanities, and 30 per cent on upholstered furniture, citing rising prices in these sectors.
India’s pharmaceutical sector at stake
India’s pharmaceutical industry has grown into a global powerhouse. In FY25, the country’s annual drug and pharmaceutical exports touched a record USD 30 billion, bolstered by a 31 per cent year-on-year surge in March alone. The US market accounts for roughly USD 8.7 billion (Rs. 77,231 crore) of Indian exports, representing around 31 per cent of the total.
Leading Indian companies such as Dr. Reddy’s, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma, and Gland Pharma derive between 30 to 50 per cent of their revenues from the American market. Industry experts warn that the new tariff could significantly impact trade, earnings, and global supply chains.
India supplies 50 per cent of the global demand for vaccines, 40 per cent of US generic medicines, and 25 per cent of all medicines in the UK. The sector is projected to grow to USD 130 billion by 2030 and USD 450 billion by 2047, driven by schemes like the Production Linked Incentive (PLI) programme and the Strengthening of Pharmaceuticals Industry (SPI) scheme.
Government initiatives to boost domestic manufacturing
India has invested heavily in domestic pharmaceutical infrastructure under the PLI scheme (Rs. 15,000 crore) to encourage manufacturing of high-end drugs like cancer and diabetes medications. The SPI scheme, with Rs. 500 crore funding, aims to modernise labs, enhance R&D, and raise competitiveness of smaller pharma companies. These initiatives are expected to help Indian companies expand global footprints and reduce dependence on imports.
Industry response and way forward
Industry representatives have expressed concern over the sudden announcement, stressing that Indian companies may face operational and financial strain if tariffs are imposed without sufficient transition time. The Indian government is expected to engage with the US administration to negotiate exemptions or phased implementation.
Experts believe that long-term strategies could include establishing US-based manufacturing units, forming joint ventures, or increasing production in SEZs to bypass tariffs.
Conclusion
Trump’s announcement marks a significant shift in US trade policy, directly affecting India’s pharmaceutical exports. While aimed at boosting domestic manufacturing, the move could disrupt global supply chains, particularly for vaccines and essential medicines. Industry and government stakeholders are closely monitoring developments to mitigate potential economic and public health implications