All Eyes On Trump: US May Be Forced To Ease Decision On 100% Pharma Tariff

"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," Donald Trump posted on social media.

Sources pointed out that since the US healthcare system is majorly dependent on medical imports, the hiked tariff rate could prove very difficult to implement. 

India-US Trade Deal

The Indian drug industry is not yet overtly concerned. Reason? Insiders said that the decision may be rolled back -- either fully or partially. Amid reports that Prime Minister Narendra Modi and Donald Trump are expected to meet soon, official sources said that the India-US bilateral trade agreement could be in place soon.

"Talks are going on and there is nothing to worry. We are ready with Plan B. You will soon see results, and the trade issue will be amicably resolved," Union Minister of State of Fisheries, Animal Husbandry and Dairying S.P.S. Baghel told The Secretariat in an exclusive interview. 

For India, which is a key supplier of pharmaceutical products the world over, the US is its single largest market. About 31 per cent of India’s total pharma exports are directed towards the US alone. In 2024, India’s pharma exports to the US stood at around US$8.7 billion in FY24.    

US Secretary of State Marco Rubio had earlier described the relationship with India as of "critical importance" to Washington, after meeting External Affairs Minister S. Jaishankar on the sidelines of the United Nations General Assembly (UNGA) in New York.

Why Trump May Be Forced To Rollback Tariff 

Although the enhanced tariff is being sold as a move to protect US jobs and revive domestic manufacturing, practical and political constraints may force a rethink by the Trump administration. 

Sources stated that due to the tariff announcement, a sudden spike in drug prices or shortages could trigger public outcry domestically. "The tariff move could be very difficult to implement as, cutting across party lines, the lawmakers would not want to face a backlash from their voters. The elected representatives would not want the US consumers to be burdened with additional costs of healthcare," sources added.    

Another pushback is expected from the US-based pharmaceutical firms, which rely on imported materials and contract manufacturing. This move is expected to hit them significantly as the tariff increase would spiral the production cost of procuring and manufacturing drugs.

Industry sources stated that the policy may also be challenged under international trade agreements or in US courts, by terming it arbitrary or discriminatory. India and other affected countries are also expected to impose countermeasures. 

What It Means for US Consumers

The 100 per cent tariff hike on imported branded and patented pharmaceuticals could significantly impact American consumers and would essentially translate into the following:  

• Higher prices of imported drugs
• Supply chain delays could lead to shortages in critical medicines
• Pressure on insurers, hospitals, and public healthcare programmes like Medicare and Medicaid
• Reduced access to affordable medications for low-income or vulnerable populations
• India’s Role As Supplier of Generic Drugs 

India is the third largest producer of drugs by volume. India contributed 20 per cent to the global export of generic drugs. The Indian pharmaceutical industry is projected to grow at a CAGR of over 10 per cent, with its market size expected to reach US$130 billion by 2034.

On the global pharmaceutical landscape, India plays a crucial role as it is among the world’s largest suppliers of generic drugs and exports nearly half of all generic medicines used in the U.S. 

According to the Pharmaceuticals Export Promotion Council of India, in 2024, India made US$27.9 billion worth of pharma exports, of which 31 per cent or US$8.7 billion went to the US.

Another US$3.7 billion worth of pharma products were exported in just the first half of 2025.

Drugs apart, Indian firms also supply essentials, including active pharmaceutical ingredients (APIs) and intermediates. So, the effect of tariffs would not only disrupt Indian exporters but also adversely affect the US healthcare system.

Risks For India

Indian pharmaceutical companies could face major revenue loss if the tariff is imposed strictly. However, it must be noted that the U.S. depends on India for affordable and high-volume production of essential medicines. 

Though Trump is trying to push for domestic production, replicating the capacity domestically would require significant investment, time, and regulatory approval.  

Impractical And Dangerous Precedent 

Trump's move is not just impractical, but can also be termed as dangerous for the US's public health system.

Given the scale of potential disruption, the Trump administration may ultimately be compelled to reconsider its move. The US may be forced to either delay the implementation, create exemptions for critical drugs, or reduce the tariff rate. 

The US may be forced to even evolve the policy, shaped by economic and domestic realities.