• Source:JND
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US President Donald Trump on Tuesday said he plans to announce tariffs on imported pharmaceuticals, which could reach 200 per cent but he would give drugmakers about one year "to get their act together." "We're going to give people about a year, a year and a half to come in and, after that, they're going to be tariffed," Trump told reporters, speaking at a meeting of his Cabinet at the White House, where he also said he planned tariffs on semiconductor imports. If the Trump administration abides by the announcement made today, it would be a major blow to India as New Delhi remains one of the top exporters of drugs to America.

They're going to be tariffed: Trump

"If they have to bring the pharmaceuticals into the country ... they're going to be tariffed at a very, very high rate, like 200 per cent. We'll give them a certain period of time to get their act together," he said. "We're going to be announcing pharmaceuticals, chips and a couple of other things - you know, big ones," Trump told reporters, while announcing a new tariff rate for copper. He did not offer specifics on when the other announcements would come.

impact of us tariff

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The Trump administration launched an investigation into the pharmaceutical industry in April as part of a bid to impose tariffs on the grounds that extensive reliance on foreign production of medicine is a national security threat. Trump has argued that the US needs more drug manufacturing, so it does not have to rely on other countries for medicines.

Lutnick reacts to Trump's pharma shocker

The Commerce Department, which is conducting the investigation, has yet to issue a report. Details on pharmaceutical tariffs "will come at the end of the month," Commerce Secretary Howard Lutnick told CNBC after the Cabinet meeting. "With pharmaceuticals and semiconductors, those studies are being completed at the end of the month, and so the president will then set his policies then, and I'm going to let him wait to decide how he's going to do it," Lutnick said.

Drugmakers raises concerns

Drugmakers have argued that tariffs could increase the chance of shortages and reduce access for patients. They have lobbied Trump to phase in tariffs in hopes of reducing their impact and granting them extra time to shift manufacturing. The companies have global manufacturing footprints, and moving more production to the US involves a major commitment of resources and could take years, they argue. "Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures for patients," Alex Schriver, spokesman for industry group PhRMA, said in a statement.

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Indian pharma sector to hit 

India's pharmaceutical exports to the United States reached $8.953 billion in FY25, a 14.2 per cent increase from the previous year. According to official trade data, the US remains a key market for Indian pharma exports, accounting for more than one-third of the country's total pharma exports. In FY25, India's overall pharma exports surpassed $30 billion, with the US, UK, Brazil, France, and South Africa being the top destinations.

Key Impacts of Trump's pharma tariff on India

Reduced Profit Margins: Indian pharma companies, especially those heavily reliant on the US market, may see their profit margins shrink due to increased tariffs. Companies like Granules India, Aurobindo, Dr. Reddy's, and Zydus could be particularly affected.

Increased Competition: Higher tariffs might encourage US companies to boost domestic production, potentially altering the competitive landscape for Indian pharma firms.

GDP Impact: The proposed tariffs could shave off 0.2 per cent to 0.5 per cent from India's annual GDP growth, with sectors like steel and pharma facing immediate pressure.

Export Diversification: Indian pharma companies may need to explore new markets in Europe, Latin America, Africa, and Southeast Asia to mitigate the impact of US tariffs.

(With inputs from agency)