WASHINGTON, April 9: US President Donald Trump has issued a warning that the current reprieve for pharmaceuticals – a major export from India – from his administration’s retaliatory tariffs will end “shortly.”
Speaking at a dinner hosted by the National Republican Congressional Committee in Washington on Tuesday night, Trump announced, “We’re going to be announcing very shortly a major tariff on pharmaceuticals,” just hours before a wide range of tariffs on most US imports were set to come into effect
Although Trump referenced China in his speech, he did not explicitly mention India, which sends 31.5% of its exports to the United States. However, it was made clear that while most Indian exports will now be subject to the newly announced 37% reciprocal tariffs, pharmaceuticals had been temporarily exempted due to their significance in supporting the US healthcare system.
Trump, promoting the upcoming move, said, “That’s breaking news, ladies and gentlemen.” He added that imposing tariffs would pressure drug companies to relocate their manufacturing from countries like China. “They will leave China, they will leave other places, because they have to sell and most of their product is sold here,” he said, asserting that companies would start “opening up their plants all over the place, in our country.”
Initially, when Trump rolled out the reciprocal tariff policy last Wednesday, certain sectors including pharmaceuticals, copper, semiconductors, lumber, bullion, energy, and select minerals were exempt due to their strategic relevance to the US economy. Pharmaceuticals, especially generics supplied from India, were spared to prevent a sharp increase in healthcare costs, as generics play a key role in maintaining affordability within one of the world’s most expensive healthcare systems.
However, Trump’s latest comments signal a possible reversal of that decision, drawing concern from industry experts and economists. ING Bank warned, “In the absence of a deal with India, we think Trump’s tariffs will mostly drive up drug prices for US consumers,” highlighting India’s dominance in the supply of generic medications.
John Murphy, president of the Association for Accessible Medicines, emphasized the stakes: “The global supply chain for generic and biosimilar medicines is critically important for US patients. Generic manufacturers simply can’t absorb new costs” due to tariffs. He noted that these companies often sell drugs at extremely low prices, sometimes even at a loss.
The broader context includes ongoing efforts between India and the US to negotiate a Bilateral Trade Agreement. Both Indian External Affairs Minister S. Jaishankar and US Secretary of State Marco Rubio have expressed a commitment to the “early conclusion” of such a deal, which could potentially soften the impact of Trump’s tariff threats.
According to healthcare analytics firm IQVIA, Indian pharmaceutical companies are vital to the US market, with four out of ten prescriptions filled in the US in 2022 coming from India. Moreover, in the top 10 therapeutic categories by prescription volume, Indian companies supplied over half the medications in five key areas: Hypertension, mental health, lipid regulators, nervous system disorders, and antiulcerants.
