New Delhi: In a bold move escalating his trade policies, US President Donald Trump has declared a 100% tariff on branded and patented pharmaceutical drugs imported into the United States, effective from October 1, 2025. This announcement, made on his Truth Social platform, comes with a key exception: companies actively building manufacturing facilities in America will be exempt. The policy aims to bolster domestic production and secure supply chains for essential medicines, but it has sparked widespread concern across global markets, particularly in major exporting nations like India, Ireland, Switzerland, and Germany.
The tariffs target brand-name or patented pharmaceutical products specifically, sparing generics and active pharmaceutical ingredients (APIs) that form the backbone of many international exports. However, industry experts warn of potential ripple effects, including higher costs, supply disruptions, and shifts in manufacturing strategies.
Understanding Trump’s Pharmaceutical Tariff Announcement
On September 25, 2025, President Trump posted on Truth Social: “Starting October 1, 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.” He clarified that “building” means the process has begun, such as breaking ground or being under construction, ensuring no tariffs for those investing in US facilities.
This policy builds on Trump’s long-standing push for reshoring manufacturing. During his first term, pharmaceuticals largely escaped tariffs, but recent months have seen escalating trade measures. The president views these duties as a tool to pressure foreign drugmakers into establishing US-based operations, enhancing national security and reducing dependency on overseas supplies. Critics, however, argue it could lead to inflated prices and shortages, especially since medicines are typically exempted from such barriers to maintain affordability.
The US imports significant volumes of pharmaceuticals, accounting for about 5.6% of total imports in 2023, valued at approximately $158 billion. Packaged medicaments alone totaled $86.4 billion, with key suppliers including Ireland (14.2% or $12.3 billion), Switzerland (14% or $12.1 billion), Germany (13.4% or $11.6 billion), and India (10.6% or $9.2 billion). Vaccines, blood, antisera, toxins, and cultures added another $65.1 billion, primarily from Ireland (23.2% or $15.1 billion) and Germany (20.9% or $13.6 billion). Other notable exporters include Italy, Denmark, and the United Kingdom.
Trump’s tariffs do not stack explicitly on existing national duties but amplify his broader strategy. Earlier in 2025, he imposed 50% tariffs on various Indian goods, partly in response to India’s Russian oil purchases, highlighting a pattern of targeted trade actions.
Impact on India’s Pharmaceutical Exports and Sector
India, recognized as one of the world’s largest pharmaceutical exporters with a 5.71% global market share, stands at the forefront of potential impacts. The US represents India’s biggest pharma market, comprising around 35% of its exports, valued at about $10 billion in FY25. In 2024, India shipped $8.7 billion (Rs 77,231 crore) worth of drugs to the US, with $3.7 billion (Rs 32,505 crore) already exported in the first half of 2025.
Fortunately for Indian firms, the tariffs explicitly exclude low-cost generics and APIs, which dominate India’s exports. India supplies over 45% of US generics and 15% of biosimilars, contributing to massive savings—$219 billion for the US healthcare system in 2022 alone, with projections of $1.3 trillion over the next five years. In 2022, 47% of all US generic prescriptions—equating to four out of every ten—came from Indian companies, per the IQVIA Institute.
Major Indian players like Dr. Reddy’s Laboratories, Aurobindo Pharma, Zydus Lifesciences, Sun Pharmaceutical Industries, Gland Pharma, Cipla, and Lupin derive 30-50% of their revenues from the American market. These firms often operate through contract arrangements with multinationals, manufacturing ingredients or formulations for branded products. While generics are safe on paper, uncertainties persist.
One key risk is inconsistent interpretations of “branded pharmaceutical drug” by US authorities. Generic medicines carry manufacturer labels, and a loose definition could lead to customs delays, increased scrutiny, and extra costs for Indian shipments. Additionally, India boasts the highest number of USFDA-compliant plants outside the US, but if companies relocate to America to avoid tariffs, it could dent domestic production.
On the flip side, short-term benefits may emerge. Higher costs for branded drugs could boost demand for affordable generics, favoring Indian suppliers. Industry projections remain optimistic: India ranks third globally in pharmaceutical production by volume and 11th by value, with the sector expected to grow to USD 130 billion by 2030 and USD 450 billion by 2047. Exports focus on drug formulations and biologicals, making up 75% of total shipments, while India provides 60% of the world’s vaccines.
Experts like Namit Joshi, chairman of the Pharmaceutical Export Promotion Council of India, suggest minimal immediate disruption, noting that many large Indian companies already have US manufacturing or repackaging units and are pursuing further acquisitions. An Indian American pharma analyst emphasized that the policy signals a long-term push for domestic production, potentially increasing capital costs and squeezing margins for exporters.
Overall, the $20 billion Indian generics export industry to the US—supplying nearly 40% of American generics—faces a mixed outlook. While spared direct hits, the tariff could disrupt partnerships and encourage a shift toward US-based operations, altering the landscape for treatments in areas like cancer and infectious diseases.
Global Market Reactions and Broader Tariff Blitz
Trump’s announcement triggered immediate market turbulence. Asian pharmaceutical shares plummeted: Japan’s Topix pharmaceutical index dropped 1%, Hong Kong’s innovative drug index fell 2.8%, South Korea’s SK Biopharmaceuticals declined 2.7%, and Australia’s CSL slid 1.6% after an initial 3% drop. In Europe, Swiss firms Lonza, Novartis, and Roche fell about 1.2%, while Germany’s Merck and Bayer dropped 1.1% and 1.5%, respectively.
Japanese companies saw varied impacts: Sumitomo Pharma closed 3.5% lower, Otsuka Holdings fell 2.9%, Daiichi Sankyo dropped 2%, Takeda Pharmaceutical dipped 0.1%, but Shionogi rose 1%. In India, the main pharmaceuticals index tumbled 2%, with all 20 listed drugmakers declining; Sun Pharmaceutical Industries sank 3%.
The Pharmaceutical Research and Manufacturers of America (PhRMA) voiced concerns, with Senior Vice President Alex Schriver stating that tariffs could jeopardize billions in US investments spurred by pro-growth policies. He noted that every dollar on tariffs diverts funds from manufacturing and R&D, risking higher costs and shortages—contrary to historical exemptions for medicines.
This pharma tariff is part of a wider escalation. On the same day, Trump announced a 50% tariff on kitchen cabinets, bathroom vanities, and associated products due to “large-scale ‘FLOODING’” from abroad, deeming it unfair to US manufacturers. A 30% duty applies to upholstered furniture (padded items with springs, fabric, or leather), and a 25% tariff targets “heavy (big) trucks” from outside the US, benefiting domestic brands like Peterbilt, Kenworth, Freightliner, and Mack Trucks. These measures, also effective October 1, prioritize national security and job protection.
Trump’s rationale echoes his administration’s stance: “We’re protecting American jobs, we’re protecting American factories. It’s very simple. If you want to sell here, you build here.” He dismisses inflation fears, insisting tariffs force investment in domestic facilities. Critics counter that importers will pass costs to consumers, exacerbating economic pressures.
Potential Long-Term Effects on US Healthcare and Global Trade
For American patients, the tariffs pose risks to affordability. Branded drug price hikes could strain budgets, though increased generic demand might offset this temporarily. However, over-reliance on imports could prompt further restrictions, pushing for full domestic production of low-cost medicines.
Globally, the policy underscores Trump’s protectionism, affecting partners beyond India. European nations like Ireland and Switzerland, major suppliers of patented drugs, face similar pressures to relocate. Jared Holz, a healthcare equity specialist at Mizuho Securities, described the impact as “nebulous and negligible” for majors with existing US presence, but smaller firms may struggle.
In context, this fits Trump’s ongoing “tariff war,” including prior duties on goods like jewelry and garments from India at 50%. His administration has also flagged countries like Afghanistan, India, China, and Pakistan as major drug transit or illicit producers, though this pharma policy focuses on legal imports.
As October 1 approaches, stakeholders—from Indian exporters to US consumers—remain vigilant. The announcement, while sparing generics, signals a seismic shift toward self-reliance in critical sectors, potentially reshaping global pharmaceutical dynamics for years to come.
This development highlights the intersection of trade, health, and security in 2025’s geopolitical landscape. With India’s pharma sector poised for exponential growth, navigating these tariffs will test its resilience and adaptability.
Frequently Asked Questions
1. What are the details of the new US pharmaceutical tariffs announced by President Trump?
On September 25, 2025, President Donald Trump announced a 100% tariff on branded and patented pharmaceutical drugs imported into the US, effective from October 1, 2025. The tariff applies unless the drugmaker is actively building a manufacturing plant in the US, defined as having broken ground or being under construction. Generic medicines and active pharmaceutical ingredients (APIs) are excluded from the tariff, which aims to encourage domestic production and strengthen US supply chains for essential medicines.
2. How will these tariffs impact India’s pharmaceutical industry?
India, a major exporter of pharmaceuticals to the US with $10 billion in exports (35% of its total pharma exports) in FY25, is partially shielded as the tariffs spare generics, which dominate India’s exports. However, uncertainties around the definition of “branded” drugs could lead to customs delays or added costs. While short-term demand for generics may rise due to higher branded drug prices, long-term risks include pressure on Indian firms to relocate manufacturing to the US, potentially impacting domestic production.
3. Which countries are most affected by the new tariffs?
The US imports significant pharmaceutical products from India, Ireland, Switzerland, and Germany. In 2023, Ireland supplied 14.2% ($12.3 billion) of packaged medicaments, Switzerland 14% ($12.1 billion), Germany 13.4% ($11.6 billion), and India 10.6% ($9.2 billion). These countries, especially those exporting branded or patented drugs, face the most significant impact, with pressure to establish US-based facilities to avoid the 100% tariff.
4. What are the potential effects on the US healthcare system and consumers?
The tariffs could increase prices for branded and patented drugs, potentially leading to higher healthcare costs for US consumers. While generics remain unaffected, a surge in their demand could strain supply chains. The Pharmaceutical Research and Manufacturers of America (PhRMA) warns that tariffs may divert funds from R&D and US investments, risking shortages and reduced access to critical treatments for diseases like cancer and infectious conditions.
5. What other tariffs were announced alongside the pharmaceutical tariffs?
On the same day, President Trump introduced a 50% tariff on kitchen cabinets, bathroom vanities, and related products, a 30% tariff on upholstered furniture (items with padding, springs, and fabric/leather coverings), and a 25% tariff on heavy trucks imported from abroad. These measures, also effective October 1, 2025, aim to protect US manufacturers like Peterbilt, Kenworth, Freightliner, and Mack Trucks, citing national security and economic fairness.
