US President Donald Trump’s new tariffs on the pharma sector will take effect from Tuesday. Though Trump switched to a straight 100 per cent duty on branded drugs from a previous phased-tariff plan, it is noted that certain drugs from the Indian market will continue to enter the US with zero duty.
The exemptions cover orphan drugs developed specifically to treat rare diseases, nuclear medicines that use radioactive substances to treat or detect different diseases, plasma-derived therapies, fertility drugs, cell and gene therapies, and antibody-drug conjugates.
The list also includes medical countermeasures related to chemical, biological, radiological and nuclear threats. Veterinary medicines from India will also enter the country without any taxes.
These are life-saving drugs with few alternatives. The exemptions may also protect American consumers from extreme price hikes.
However, India’s most vibrant and important pharma division of generic medicines will be subject to the tariffs, unless the manufacturing companies are actively building plants in the US. India supplies around 40 to 47 per cent of all generic drugs used in the country, and imported $9.7 billion worth of pharma products from India in 2025. Indian firms derive upto 50 per cent of total revenue from American buyers.
American consumers might also face price hikes as US-made generics with FDA-approved doses will be materially more expensive than Indian cost structures.
Drug makers are also exploring the option of opening plants in the US, with major global giants like AstraZeneca and Roche investing $50 billion in new facilities in the country. Merck, Biogen and Pfizer also hinted at plans to shift production to the US.
The US Department of Commerce’s Bureau of Industry and Security (BIS), in a September 23 notice available on the Federal Register, listed India along with 19 other countries that are eligible for zero tariffs for special medications.
Apart from India, the other jurisdictions include Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the UK and Vietnam.
The tariffs first took effect on July 31 for companies covered under one annex to the proclamation. The other companies under the scope of Section 232 will be subjected to the tariffs from September 29.
