The US has imposed a 100% tariff on patented drugs manufactured outside the country, with implementation scheduled between July 31, 2026 for larger firms and September 29, 2026 for smaller companies. According to details shared by the White House and reported by ANI, the tariffs will apply to imports from countries, including India, that have not entered into reshoring agreements with the US Commerce Department or signed Most Favoured Nation (MFN) pricing deals with the Department of Health and Human Services (HHS). The tariffs will take effect after a 120 to 180-day transition period, following the same timeline as the previous year's measures announced on April 2. Companies can avoid the full duty by negotiating trade terms or committing to setting up manufacturing facilities locally, with reduced tariffs of 10-20% available for firms that lower prices or shift production to the US.
India's pharmaceutical exports to the US face minimal immediate impact due to the tariff structure. As reported by ANI, about 90% of India's pharmaceutical exports to the US are generic medicines, which are currently exempt from the tariffs. In 2025, India exported $9.7 billion worth of pharmaceuticals to the US, accounting for 38% of its total global pharma exports of $25.8 billion. However, the exemption may not be permanent, with a senior White House official telling ANI that "Generics, which are the majority of Indian pharma exports, are exempt from tariffs, but the Commerce Department will evaluate the state of generics reshoring and re-evaluate generics tariffs accordingly." This signals that the US administration is keeping its options open and may extend tariffs to generic drugs in the future if domestic manufacturing goals are not met.
Several countries have secured reduced tariff rates under existing arrangements. According to ANI, the European Union, Japan, South Korea and Switzerland will face a reduced tariff of 15%, while the United Kingdom will be subject to a 10% tariff, potentially falling to zero with further compliance. The report notes that developed nations including Ireland, Germany, Switzerland, Belgium, Denmark, the United Kingdom and Japan are likely to be most affected, as major suppliers of high-value and patented drugs including biologics. These differentiated rates highlight Washington's strategy of incentivising production shifts and policy alignment through trade concessions.
The US is using tariffs primarily as a pressure tool rather than a revenue generator, according to the Global Trade Research Initiative report cited by The Times of India. The aim is to push companies to reduce drug prices in the US, shift manufacturing locally and strengthen control over key pharmaceutical supply chains. The order is based on a Section 232 investigation launched on May 1, 2025, which cited national security concerns over dependence on foreign drug supplies. The measure is expected to impact companies exporting high-value patented drugs to the United States, particularly those without manufacturing presence or strategic agreements within the US. Generic medicines remain exempt for approximately one year to avoid shortages and price increases.
The tariff announcement comes amid ongoing trade negotiations between India and the US. As reported by The Times of India, India and the US have been in long-standing talks over a free trade agreement, culminating in an interim deal announced on February 2. The US had agreed to lower tariffs on Indian goods to 18% as part of this deal. Commerce and industry minister Piyush Goyal recently met US trade representative Jamieson Greer to review next steps in negotiations at the 14th WTO Ministerial Conference in Yaounde. For India, the developments add another layer of complexity to an already evolving trade relationship with the United States, while the exemption for generic medicines offers short-term relief, the broader direction of US trade policy suggests increasing scrutiny of imports across sectors.
