Key Summary
- The president says the objective of this policy is to protect the people of the United States.
- In 2025, India exported $9.7 billion worth of pharmaceuticals to the US.
- Doctors and supply chain experts feel that taxing imported generics will raise costs and lead to shortages of crucial drugs.
US President Donald Trump has announced plans to onshore generic drugs manufacturing by raising tariffs to 100 per cent in August 2028 and 200 per cent thereafter - a move that could impact India, the largest exporter of generic drugs to the US.
In a post on Truth Social, Trump said: "Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for two years, after which the TARIFF will be raised to 100 per cent for one year, and 200 per cent thereafter," Trump said.
"This is done 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.
The president said the objective of this policy is to protect the people of the United States.
"The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as it is," he said.
Trump signed an executive order in April imposing 100% tariffs on branded pharmaceuticals imported into the US unless manufacturers agree to government drug pricing deals or commit to making their products domestically.
India is often referred to as the pharmacy of the world, as it supplies generic medicines to countries worldwide.
In 2025, India exported $9.7 billion worth of pharmaceuticals to the US, accounting for 38 per cent of its total global pharma exports of $25.8 billion, according to a Global Trade Research Initiative.
Indian generic medicines are widely prescribed for hypertension, diabetes, cancer, infectious diseases, and mental health.
Costlier medicines
Doctors and supply chain experts have been sharply critical of the idea of taxing imported generics, saying it threatened to raise costs, spur rationing and lead to shortages of crucial drugs.
More than 90% of medicines sold in the U.S. are generics, according to the U.S. Food and Drug Administration.
The proposed steep tariffs on generic medicines could significantly affect India's largest pharmaceutical export market, said economic think tank GTRI.
However, it said that the impact is unlikely to be uniform.
"Many Indian generic medicines sell for seven to ten times less than branded alternatives. Even after a 100 per cent tariff, many products could remain cheaper than branded medicines, meaning much of the additional cost would likely be passed on to US healthcare providers, insurers and patients rather than immediately eliminating Indian exports," it said.
It added that the greatest pressure is expected to fall on higher-value generic formulations and branded generics, where manufacturing in the United States could become commercially viable.
The Indian Pharmaceutical Alliance (IPA) on Wednesday (22) said tariffs alone will not help build a sustainable generic drug manufacturing base in the US.
Kathleen Jaeger, US Spokesperson for the IPA, said that India is a trusted and indispensable affordable medicine partner to the US, supplying nearly 50 per cent of the generic medicines used by America's health care system.
She said that the two-year tariff-free transition period provides an important opportunity for the US and companies to develop a practical pathway that protects American patients, restores a sustainable US generic medicines sector and advances supply-chain resilience.
IPA Secretary General Sudarshan Jain said India has been a trusted partner in ensuring the supply of affordable and quality-assured medicines for American patients.
Leading Indian pharmaceutical companies have a major US presence (with over 40 facilities), supporting American jobs, investing in manufacturing, research and resilient supply chains, he said.
Collectively, IPA companies account for over 85% of the private sector investment in pharmaceutical research and development.
They contribute more than 80% of the country’s exports of drugs and pharmaceuticals and service over 64 percent of the domestic market.
Impractical move: Dr Reddy's
Dr Reddy's Laboratories CEO Erez Israeli has said that tariff hike will lead to higher prices of generic drugs in the country and it is not practical to move operations there.
The company will watch how things evolve but it will not do "anything special" because of the announcement by US President Donald Trump, who stated that tariffs on imported generic medicines will be kept at zero per cent for two years before raising them to 100 per cent in August 2028 and 200 per cent thereafter.
"If the tariff is increased, we will have to increase prices in the US," Israeli told reporters in an earnings call when asked about Trump's announcement.
It is not practical to move manufacturing operations to the US, he noted.
"Naturally, we will see how this will evolve," Israeli said, adding "we are not going to do anything special because of the announcement".
He cautioned that with the tariffs, additional costs will come.
Asked if there could be partnerships, technology transfer or contract manufacturing in the US, he said the company is "always open to anything that will be good for the business".
Israeli, however, said considering the "magnitude and cost difference" of the US with some of the markets like Russia, "we are very far from such a step, but if required we will look at it".
