Donald Trump has given great relief to the pharmaceutical sector around the world. This relief is not a small one. In fact, the White House has postponed plans to impose tariffs on imports of generic drugs. The move is a relief for Indian pharmaceutical companies, which supply nearly half of the generic drugs in the United States. This decision will also provide great relief to millions of Americans who depend on imported generic drugs to treat diseases ranging from high blood pressure and depression to ulcers and high cholesterol. India is the largest single source of generic drugs for the US market, far ahead of domestic producers, whose share is 30 percent. According to IQVIA, a global medical data analytics company, India supplies 47 percent of all generic drugs filled in US pharmacies.
There is no benefit of tariff on generic medicines
According to the Wall Street Journal, this decision by the White House represents a major reduction in tariff investigations on drugs by the Commerce Department. When the investigation was announced in April, a Federal Register notice said it would target “finished generic and non-generic drug products, as well as drug components.” According to the Times of India report, this step has been taken after internal debate within the MAGA faction. The radicals had insisted on imposing tariffs to bring drug manufacturing back to America, citing national security concerns. However, members of President Trump’s Domestic Policy Council argued that “imposing tariffs on generic drugs would increase prices and could even lead to drug shortages for consumers.”
He further said that tariffs on generic drugs will not be effective because production costs in countries like India are so low that even very high tariffs cannot make American manufacturing profitable. After this decision, shares of Indian pharmaceutical companies are trading with gains on Thursday. In which Cipla gained 0.64% at Rs 1504.30; Sun Pharma up 0.08 per cent at Rs 1633.00; Dr Reddy’s up 1.78 per cent at Rs 1256.35; And Aurobindo Pharma was seen with a gain of 3.38% at Rs 1106.00.
Trump’s 100 percent tariff announcement
Starting October 1, 2025, Trump announced via Truth Social that the White House will impose 100 percent tariffs on patented drugs, except for companies manufacturing pharmaceutical plants in the US. He had said that from October 1, 2025, we will impose 100 percent tariff on any branded or patented pharmaceutical product, unless a company is setting up its medicine manufacturing plant in the US. ‘Construction’ will be defined as ‘construction work started’ and/or ‘under construction’.” Despite this announcement, many questions still remain: which medicines will fall under its purview, how “branded” or “patented” will be defined, and whether Indian generics or active pharmaceutical ingredients (APIs) could be affected. Branded generics and APIs used in major products may attract duty, putting Indian drug manufacturers in a high-risk situation.
India’s dominance in American pharmaceutical market
India’s pharmaceutical exports are on a strong growth path. In fiscal year 2025, annual exports reach a record $30 billion. A year-on-year growth of 31 percent was seen in March. In August 2025 alone, exports increased from $2.35 billion in August 2024 to $2.51 billion. According to Pharmexil, about $8.7 billion (31 percent) of exports were to the US in fiscal year 2024, of which $3.7 billion were sent abroad in the first half of 2025.
Indian companies dominate key therapeutic areas such as high blood pressure, mental health, lipid regulators, nervous system disorders and anti-ulcer drugs, supplying more than half of the drugs in these categories. According to some estimates, Indian generic drugs could save the US healthcare system $219 billion in 2022 alone and $1.3 trillion between 2013 and 2022.