US President Donald Trump has announced a phased tariff policy on imported generic medicines, proposing a 100 percent tariff from August 1, 2028, followed by a 200 percent tariff from August 1, 2029, as part of an initiative to encourage pharmaceutical manufacturing within the US. The announcement has sparked concerns across India's pharmaceutical sector, which relies heavily on the US as its largest export market.

According to the announcement made on Trump's social media platform, Truth Social, imported generic drugs will continue to enjoy zero tariffs for 2 years beginning August 1, 2026. After this transition period, a 100 percent tariff will be imposed for 1 year before increasing to 200 percent thereafter.

The proposed policy is aimed at encouraging pharmaceutical companies to establish manufacturing facilities in the US. Trump stated that companies choosing not to invest in domestic manufacturing during the transition period would face steep tariffs, describing the move as part of a broader strategy to reshore generic pharmaceutical production and strengthen the country's healthcare security. The existing policy governing patented and innovative medicines will remain unchanged.

While the 2-year transition period offers temporary relief, industry experts believe significant uncertainties remain regarding the implementation of the policy and its long-term impact on global pharmaceutical supply chains.

Speaking on the announcement, Namit Joshi, Chairman, Pharmexcil, said, “We see today's announcement as an opportunity to build even more clarity into the FTA conversations ahead. Pharma has always been an important chapter in those discussions, and a defined tariff timeline gives both sides a clear framework to work within as they shape a strong, durable agreement — including any specific provisions for generics.”

According to Global Trade Research Initiative (GTRI) estimates, India exported pharmaceutical products worth USD 9.7 billion to the US in 2025, accounting for 37.7 percent of the country's total pharmaceutical exports of USD 25.8 billion. India currently supplies nearly 47 percent of generic medicines consumed in the US, although these account for approximately 30 percent of the market by value due to their comparatively lower prices.

Industry observers also point out that expanding manufacturing capacity in the US may not be straightforward. Establishing large-scale pharmaceutical manufacturing facilities and securing regulatory approvals typically require longer than the proposed two-year transition period. In addition, India's continued dependence on China for Active Pharmaceutical Ingredients (APIs) and other critical raw materials could complicate efforts to rapidly relocate production.

The latest proposal follows a series of measures aimed at boosting domestic pharmaceutical manufacturing in the US. 

In September 2025, the US administration announced plans to impose a 100 percent tariff on imported branded and patented medicines, followed by tariffs on selected branded medicines and pharmaceutical raw materials introduced earlier this year.

If implemented as proposed, the new tariff regime could reshape global generic drug supply chains and compel Indian pharmaceutical companies to accelerate investments in overseas manufacturing while expanding into alternative international markets.