Trump Targets Pharma Imports In Fresh Tariff Drive, India Likely To Face Heat

Continuing his economic offensive, US President Donald Trump announced on Tuesday that Washington is preparing to unveil a "major" tariff on pharmaceutical imports in the near future.

India's pharmaceutical sector - one of the country's most trade-reliant industries with the US - is expected to bear a major brunt of the decision.

Photo Credit: AP/PTI

While speaking at an event hosted by the National Republican Congressional Committee, the American President stated that the new tariff would encourage pharmaceutical companies to relocate their operations back to the United States.

Until now, the Trump administration had excluded pharmaceuticals and semiconductors from its broader reciprocal tariff measures.

What Could This Mean for India?

The United States is India's largest export destination for pharmaceutical products. In the financial year 2023-24, India exported pharmaceutical goods worth $27.9 billion, of which $8.7 billion - or 31% - went to the US, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil).

Reports indicate that India supplies over 45% of generic and around 15% of biosimilar medicines used in the US. Major Indian drugmakers such as Dr. Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma, and Gland Pharma derive between 30% and 50% of their total revenues from the American market.

Implications for Both Nations

Analysts have cautioned that higher US tariffs on pharmaceutical imports could have adverse effects on both countries. The move is expected to increase production costs, reduce manufacturers' price competitiveness, and ultimately push up prices for consumers.

"If the US begins imposing tariffs on the pharma sector, both countries will be affected," analysts at HDFC Securities told the financial daily Mint.

They elaborated that the US relies heavily on cost-effective generics made in India, and tariffs could drive up prices, spur inflation, and even cause medicine shortages.

On the other hand, Indian firms, already operating on narrow margins in the US generics market, may find it difficult to absorb the added costs and could be forced to pass them on to American customers or insurers.