100% Pharma Tariff: Trump’s ‘Build Here’ Ultimatum Hits Global Drug Imports, Threatens India

In a major escalation of his “America First” trade agenda, US President Donald Trump on Thursday announced the imposition of a massive 100% tariff on imports of branded or patented pharmaceutical products beginning October 1. The move, communicated via a post on his social media platform, is explicitly designed to coerce global drug manufacturers into relocating their production lines to the United States, offering an exemption only to companies that are actively “building” a manufacturing plant in the US, defined as “breaking ground” and/or “under construction.”

This dramatic tariff hike has sent immediate shockwaves through the global pharmaceutical supply chain, with significant repercussions anticipated for major exporting nations, most notably India—the “pharmacy of the world.”

Potential Fallout for India’s Pharma Sector

The United States is the single largest market for Indian drugmakers, particularly in the multi-billion dollar generic medicines space. India is a dominant supplier to the US market, reportedly accounting for approximately 45% of generic and 15% of biosimilar drugs used in the country, contributing an estimated $3.6 billion to $3.7 billion in exports in the first half of 2025 alone.

While the new 100% tariff is specifically targeted at branded or patented pharmaceutical products, and therefore appears to primarily target multinational giants, a cloud of uncertainty hangs over Indian exporters. Industry analysts are closely watching for clarity on whether the definition of “branded or patented” could be stretched to include complex generics or specialty medicines, where Indian firms like Sun Pharma, Dr. Reddy’s Laboratories, Lupin, and Aurobindo Pharma have a significant presence.

The US market’s reliance on cost-effective Indian generics is immense, with estimates suggesting that Indian-sourced medicines saved the US healthcare system over a trillion dollars in the last decade. A disruption to this supply chain, or an interpretation that captures more products, could have a profound effect on the affordability and availability of medicines for US consumers, simultaneously eroding the market share of Indian companies.

The ‘Build Here or Pay Up’ Mandate

The President’s stipulation that companies can avoid the tariff by “building” manufacturing facilities in the US highlights a direct strategy to re-shore critical production and bolster domestic pharmaceutical supply chain resilience. For Indian pharmaceutical majors with a significant US footprint, this presents a direct challenge: either make substantial, immediate investments in US-based plants or risk facing insurmountable duties on their high-value, branded product exports.

Some Indian companies already have manufacturing facilities in the US, which might afford them some protection. However, the sheer size of the 100% tariff on other product lines increases the pressure to expand this American presence aggressively.

Broader Trade Tensions

The pharmaceutical tariff is part of a broader package of import taxes announced by President Trump, which also includes:

• 50% Tariff on kitchen cabinets and bathroom vanities.
• 30% Tariff on upholstered furniture.
• 25% Tariff on heavy trucks.

These new levies come just months after the administration introduced a sweeping set of import taxes and follows an earlier investigation into the impact of pharmaceutical imports on US national security. Moreover, India’s exports are already subject to a 50% reciprocal tariff imposed earlier by the administration, which includes a 25% “penalty” related to India’s continued purchase of Russian oil.

As the October 1 deadline approaches, both the Indian government and major pharmaceutical exporters will be racing to assess the precise impact of the tariff and formulate a strategic response. The coming weeks are likely to see intense lobbying and diplomatic engagement as the global pharma industry grapples with the prospect of fundamentally restructured supply chains and soaring import costs.