By Rajwa Quasim
President Donald Trump announced on Tuesday that steep tariffs on import of generic pharmaceuticals will be imposed, giving drugmakers a two-year window to shift the production to the U.S. before 2028. Trump described the move as an effort to “reshore” generic drug manufacturing back to American soil.
According to Trump’s post on Truth Social, generic drugs entering the U.S. will have zero percent tariffs for the next two years and the tariffs will take effect on August 1, 2028. The rate will jump to 100% for a year and then to 200% after that. Companies which fail to relocate the manufacturing units to U.S. within that window will face levies which he described as “a penalty” for companies.
The two-year deadline is for pharmaceutical companies to invest in domestic plants and equipment. He further confirmed that the tariff policy on patented and branded pharmaceuticals will remain unchanged under the newly announced plan. He had previously imposed 100% levy on patented pharmaceutical products and ingredients under Section 232 in which he exempted generic drugs, biosimilars, and related ingredients at the time.
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Under Trump’s “most favored nation” policy, major pharmaceutical companies including Eli Lilly, Pfizer and Novo Nordisk have already struck deals to lower drug prices and exempt them from tariffs for three years.
Deborah Elms, head of trade policy at the Hinrich Foundation, stated that building pharmaceutical production in the U.S. is going to be costly and complex where inputs would still come from abroad. He said, “I am not sure that even a potential 200% tariff will change the fundamental math.”
The 50% of all generic medicines consumed in America is imported from India. For India, its nearly a third of pharma exports. These include everyday painkillers and antibiotics. Chinese companies dominate in supply of active ingredients such as amoxicillin and heparin. This has kept the generic medicines affordable to Americans.
Analysts also questioned if this move would actually succeed in bringing manufacturing to U.S. Vishal Manchanda, an analyst at Systematix group, noted that building a new manufacturing plants takes at least three years which is longer than Trump’s two-year window. He further stated that manufacturers might instead diversify away from the U.S. market than investing in it.
Generic drug production in U.S. might make it unaffordable to consumers than importing, as countries like India has lower cost of labor and cheap manufacturing, which U.S. doesn’t. This could go against Trump’s envisioned lower drug prices.
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The Chief Executive Officer Richard Saynor of Sandoz Group AG had warned last year that shift towards steep tariffs were likely to make drugs more expensive and limit access for patients. Meanwhile, Teva Pharmaceutical Industries Ltd. and Viatris Inc. said it is too early to assess the implication of this move.
What this means to India?
Indian pharma companies hit the hardest. According to the reports, pharma exports totaled around $10.5 billion in 2024-25. The duties on drugs would affect over 40% of India’s exports to the U.S., while including existing levies on steel, and autos. About 65% of birth control pill prescriptions in the U.S. in 2024 came from two India-based manufacturers: Glenmark Pharmaceuticals Ltd. and Lupin Ltd .
The current move of U.S. may encourage New Delhi to diversify its generic pharma exports.
The two countries had struck a deal in February on generic pharmaceuticals, which said India would “receive negotiated outcomes with respect to generic pharmaceuticals and ingredients.” The two-year window provides New Delhi to push for further talks and negotiate on tariff relief.