US Slaps 100% Tariff on Patented Drugs; India's Generics Get a Pass

Crucially for India, the proclamation clarifies that generic drugs--a segment in which Indian firms dominate globally--are exempt "at this time," adding that such products "shall not be subject to Section 232 tariffs."

For India, the impact is likely to be mixed. In the near term, the exclusion of generics offers a buffer, ensuring continuity in exports of low-cost medicines that form the backbone of India's pharmaceutical trade with the US. Indian drugmakers, which command a significant share of the US generics market, are unlikely to face immediate disruption.

"Generics, which constitute the majority of Indian pharma exports, are exempt from tariffs, but the Commerce Department will evaluate the state of generics reshoring and re-evaluate tariffs accordingly," a senior White House official told ANI.

Despite this, the longer-term implications are more complex. The steep tariffs on patented drugs and active pharmaceutical ingredients (APIs) could ripple through global supply chains in which Indian firms play a critical role, particularly in contract manufacturing and as suppliers of intermediates to multinational pharmaceutical companies.

"A 100% tariff applies to patented products. Any patented drug imports from India made by companies that do not get approval for a reshoring plan will be subject to a 100% tariff," the White House official clarified.

The proclamation's emphasis on fragile supply chains and foreign dependence signals a broader policy push that could encourage US and global firms to shift production away from established hubs like India.

At the same time, incentives tied to onshoring production and research and development (R&D) may redirect future investments toward the US, potentially affecting capital flows into India's pharmaceutical sector.

The tariffs will be implemented in phases beginning in July and September 2026 and will remain in place unless revised by the US administration.

President Donald Trump's proclamation noted that "pharmaceuticals and associated active pharmaceutical ingredients (APIs) ... are being imported ... in such quantities and under such circumstances as to threaten to impair the national security of the United States."

The proclamation highlights that "approximately 53 per cent of patented pharmaceutical products distributed domestically are produced outside the country," while just "15 per cent of patented APIs by volume" are manufactured domestically.

It warns that this reliance could "limit United States access to life-saving medications in the event of global supply chain disruption."

Under the new framework, "imports of patented pharmaceuticals and associated pharmaceutical ingredients ... will be subject to a 100 per cent ad valorem duty rate." Companies that commit to relocating production to the US will receive temporary relief, with tariffs reduced to 20 per cent initially, though "the ... rate shall increase to 100 per cent" within four years.

The US administration underscored that patented medicines are "pivotal for treating cancer, rare diseases, autoimmune disorders, infectious diseases, and other critical health challenges," and argued for "a self-sufficient domestic manufacturing and industrial base ... to support national defense requirements and maintain public health security."

- ANI