A year after sweeping tariff measures unsettled global markets, the United States has introduced a fresh round of duties targeting pharmaceuticals and metals. Under the new order, Washington will impose tariffs of up to 100 per cent on patented drugs manufactured outside the country, a move aimed at pushing companies to shift production to the US and reduce reliance on imports.
What the new tariff order says
The policy focuses on high-value patented medicines and select pharmaceutical ingredients produced overseas. These tariffs are set to come into effect between August and September 2026, following a transition period of 120 to 180 days, The Times of India reported.
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Companies that agree to lower drug prices or invest in US manufacturing facilities may receive partial relief, with reduced tariffs ranging between 10 per cent and 20 per cent, or avoid them entirely.
A White House official clarified the scope of the move, stating, "100% tariff is on patented products. Any patented drug imports from India made by companies that do not get approved for a reshoring plan will be subject to a 100% tariff."
Some countries have secured concessions. The European Union, Japan, South Korea and Switzerland will face a lower tariff of 15 per cent, while Britain has been granted tariff-free access for medicines for three years.
Importantly, generic drugs remain exempt for now. "Generic medicines—making up over 90% of US drug use—are exempt for now, likely for about a year, to avoid shortages and price increases," the report noted.
Limited immediate impact on India
According to the Global Trade Research Initiative (GTRI), the short-term effect on India is expected to be minimal, mainly because a large share of India's pharmaceutical exports to the US consists of generic medicines, which are currently outside the scope of the tariff.
"The United States will impose tariffs of up to 100% on certain branded medicines and key pharmaceutical ingredients, while leaving generics untouched; a move that leaves India largely protected given its dominance in low-cost generic drug exports to the US," GTRI said.
Another official told ANI, "Generics, which constitute the majority of Indian pharma exports, are exempt from tariffs, but the Commerce Department will evaluate the state of generics reshoring and re-evaluate tariffs accordingly."
However, some Indian firms may still face pressure. Companies involved in branded or specialty drugs, or those supplying inputs for patented medicines, could be affected under the current framework.
Developed nations likely to feel the heat
The tariff is expected to hit developed pharmaceutical exporters the hardest. Countries such as Ireland, Germany, Switzerland, Belgium, Denmark, the United Kingdom and Japan, key suppliers of patented and high-value drugs, are likely to see the biggest impact.
The policy does not offer blanket exemptions based on trade agreements. Instead, relief depends on whether companies meet conditions such as price reductions or investments in US-based manufacturing.
Tariffs as a strategic tool
The report suggests that the US is using tariffs more as a tool of pressure than a revenue mechanism. The broader goal is to push companies to cut drug prices, relocate production to the US and strengthen domestic supply chains.
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The move is based on a Section 232 investigation launched in May 2025, citing national security concerns linked to dependence on foreign drug supplies. It also signals continuity in US trade strategy, even after earlier tariff measures faced legal setbacks.
Industry response and broader trade context
Pharmaceutical companies, especially in Europe, are expected to reassess their strategies. Some may consider limited price cuts, investment in US manufacturing, or shifting final-stage production processes such as packaging.
Alongside pharma, the US has also revised tariffs on metals like steel, aluminium and copper, reinforcing its push to boost domestic production.
While India remains largely insulated for now, the report cautions that any expansion of these tariffs, particularly if generics are included in the future, could increase risks for Indian exporters.
