Trump imposes 100% tariff on patented drug imports; generics spared

The United States (US) on Thursday announced wide-ranging trade measures targeting pharmaceutical imports and metal products, after President Donald Trump signed two major executive actions.

Under the new framework, the US will impose a 100 per cent tariff on patented pharmaceutical imports from countries, including India, that have not signed a reshoring agreement with the US Commerce Department or a 'most favoured nation' (MFN) pricing deal with the Department of Health and Human Services.

However, generic drugs have been spared. The executive order said, "I have further determined not to adjust imports of generic pharmaceuticals and their associated ingredients, including biosimilar products, at this time."

It added, "This determination includes purchases of generic pharmaceuticals and ingredients for the Strategic API Reserve. I find that such products should not be subject to section 232 tariffs at this time."

A senior White House official said the move is aimed at reducing the country’s reliance on overseas suppliers for critical medicines. The official told news agency ANI, "100 per cent 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 per cent tariff."

Generics exempt for now

Most of India’s pharmaceutical exports to the US are generic medicines, which remain exempt under the current policy.

However, officials indicated that this exemption may not be permanent if the generics sector does not shift manufacturing back to the US.

"Generics, which are the majority of Indian pharma exports, are exempt from tariffs, but the Commerce Department will evaluate the state of generics reshoring and re-evaluate generics tariffs accordingly," the official further told ANI.

The new tariffs will come into force from July 31 for larger companies and September 29 for smaller firms.

Preferential tariffs for select countries

The US administration has also offered lower tariff rates to five country groupings.

The European Union, Japan, South Korea and Switzerland will face a 15 per cent tariff. The United Kingdom will be subject to a 10 per cent tariff, after major pharmaceutical firms such as GSK signed reshoring and MFN agreements with the US government.

Changes in metals tariff rules

Alongside the pharmaceutical measures, the administration announced revisions to how tariffs are applied to products containing steel, aluminium and copper, a move that could affect Indian metal exporters.

Under the updated rules, products containing less than 15 per cent metal by weight will not face a separate metals tariff and will only be subject to the standard country-level duty.

If the metal content exceeds 15 per cent by weight, a flat 25 per cent tariff will apply to the entire product value, regardless of the exact metal composition.

Anniversary of “Liberation Day” tariffs

The announcements were made on the first anniversary of the tariff initiative launched by Trump last year, referred to by the administration as “Liberation Day.” The sweeping tariff plan introduced then had triggered major reactions in global markets and significantly altered international trade dynamics.

(With agency inputs)