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Ajay Srivastava, founder of Global Trade Research Initiative, is an ex-Indian Trade Service officer with expertise in WTO and FTA negotiations.
April 3, 2026 at 6:47 AM IST
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.
The tariffs are expected to begin between August and September 2026, following a transition period of 120–180 days. Companies that cut prices or shift production to the US may face lower tariffs of 10–20% or get exemptions.
The order, issued on April 2, 2026 builds on a Section 232 investigation launched on May 1, 2025, which cited national security risks from dependence on foreign drug supplies.
The order’s timing, issued on the first anniversary of the earlier “Liberation Day” tariff push—signals a continuation of Washington’s aggressive trade strategy.
The tariffs will mainly affect Ireland, Germany, Switzerland, Belgium, Denmark, United Kingdom and Japan, which are major exporters of patented and high-value drugs including biologics to the US.
The order does not exempt countries with trade arrangements with the US, including the European Union and Japan. Instead, any relief is tied to company-level compliance, not country status.
Generic medicines—making up over 90% of U.S. drug use—are exempt for now, likely for about a year, to avoid shortages and price increases.
For India, the immediate impact is limited. Around 90% of India’s pharmaceutical exports to the US are generics, which remain exempt. In 2025, India exported $9.7 billion worth of pharmaceuticals to the US, accounting for 38% of its global pharma exports of $25.8 billion.
However, Indian firms producing branded or specialty drugs, or supplying inputs for patented medicines, could face tariff pressure. The larger concern is future uncertainty if tariffs are extended to generics.
U.S. Strategy
The US is using tariffs mainly as a pressure tool, not to raise revenue. Its goal is to push drugmakers to cut prices in the US, shift some manufacturing locally, and to gain greater control over critical pharmaceutical supply chains, treating the sector as strategically important like semiconductors. The tariffs are designed to be avoidable—companies that lower prices or invest in US production can escape them.
Multinational pharmaceutical companies, particularly in Europe and Ireland, are expected to respond pragmatically. Many may negotiate for lower tariff rates by offering limited price cuts or selective US investments, rather than agreeing to broad global price reductions.
Some firms could expand final-stage manufacturing or packaging in the US to qualify for exemptions while keeping core production in Europe. Others may adjust internal pricing structures or delay U.S. product launches if profitability is affected.
With the US Supreme Court striking down reciprocal tariffs, Washington is likely to rely more heavily on tools such as Section 232 of the Trade Expansion Act of 1962 (national security) and Section 301 of the Trade Act of 1974 (foreign trade barriers) to justify tariffs on a wide range of products and countries.
In effect, the court’s decision has not changed the tariff strategy—it has only pushed the administration to shift the legal basis while keeping the pressure intact. This creates a deeper problem for trading partners: even countries that sign trade deals with the US are not insulated from such actions, as these investigations can still be launched irrespective of existing agreements. The obvious question then arises—if partners must still face tariffs and investigations after making major concessions, what is the real value of entering into trade deals with the US?
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