US President Donald Trump on Wednesday unveiled a phased tariff plan for imported generic drugs, giving manufacturers a two-year window to shift production to the US before imposing hefty import duties that could significantly impact Indian drug exports.
In a post on Truth Social, Trump said that all generic drugs entering the US will still face zero tariffs from August 1, 2026, for two years, after which they will attract a 100% tariff from August 2028 and 200% from August 2029. The move is aimed at encouraging pharmaceutical companies to manufacture generic drugs in the US.
What Trump announced
“Beginning August 1, 2026, all generic drugs brought into the United States will remain subject to a zero percent tariff for two years, after which the tariff will be raised to 100% for one year, then 200% thereafter,” Trump wrote.
He said the policy aims to “bring generic drug production back to America” by penalizing companies that don’t build factories and manufacturing equipment in the United States during the two-year transition period.
Trump added that “the purpose of this policy is to protect the people of the United States,” while noting that the administration’s policy on patented, branded and innovative drugs will remain unchanged.
Why could India be hit?
India is expected to be among the countries most exposed to the proposed tariff regime.
India, often referred to as the “pharmacy of the world,” is the largest supplier of generic drugs to the United States. Indian pharmaceutical companies export $9 to $10 billion worth of generic drugs to the US market every year, accounting for nearly 40% of all generic drugs used in the United States.
According to the Indian Ministry of Commerce, pharmaceutical exports to the US reached $10.5 billion in 2024-25, making pharmaceuticals one of the most important categories of India’s exports to America.
The Global Trade Research Initiative (GTRI) report also estimated that India exported $9.7 billion worth of medicines to the US in 2025, accounting for 38% of its global pharmaceutical exports.
Indian-made generic drugs are widely prescribed in the United States to treat high blood pressure, diabetes, cancer, infectious diseases, and mental health conditions.
Read also- An unequal relationship: US-India trade relations and vicissitudes
What does the tariff schedule mean?
Trump’s proposal creates a three-stage roadmap:
- August 1, 2026 – August 2028: Exemption from customs duties on imported generic medicines.
- August 2028 – August 2029: Imports face 100% tariffs.
- From August 2029 onwards: tariff doubled to 200%.
The transition period appears designed to encourage companies to move manufacturing to the United States before higher tariffs take effect.
Why generic drug makers face a greater challenge
In contrast to manufacturers of patented drugs, generic drug companies operate on thin profit margins and rely heavily on global manufacturing networks to keep costs low.
This makes it difficult for them to absorb tariffs or quickly move production facilities to the United States.
Major global pharmaceutical companies such as Sandoz, Teva Pharmaceuticals, and Viatris manufacture a significant portion of their products outside the United States. Sandoz CEO Richard Saynor had previously warned that steep US tariffs on generic drugs could increase drug prices and reduce patients’ access to them.
Will Indian companies get an exemption?
It remains unclear how Trump’s latest announcement will apply to Indian exporters.
India and the United States agreed in February to pursue “negotiated outcomes” on generic medicines and pharmaceutical ingredients as part of their broader trade discussions. It is not yet known whether these negotiations will lead to exemptions or reductions in tariffs for Indian manufacturers.
Trump’s campaign for domestic manufacturing
The latest announcement is part of Trump’s broader effort to bring drug manufacturing back to the United States.
His administration has repeatedly claimed that America must reduce its dependence on drug production abroad. In 2025, it launched a national security investigation under Section 232 into drug imports, and has since pressed drug companies to expand manufacturing within the United States.
While many patented drug makers have announced new investments in U.S. manufacturing, the new tariff roadmap puts generic drugmakers under greater pressure to follow suit or risk facing punitive import duties starting in 2028.
