U.S. tariffs on medicines accelerate reshoring efforts amid global pharmaceutical shifts

President Donald Trump’s new 100% tariff on imported branded medicines triggers market turbulence, prompting Indian pharmaceutical exports to reassess strategies as Washington aims to bolster domestic manufacturing and alter global supply chains.

On 25 September 2025, U.S. President Donald Trump announced a sweeping new trade policy imposing a 100% tariff on branded and patented medicines imported into the United States, effective from 1 October. This unexpected move ...

is part of a broader initiative to “reshore” American manufacturing, with additional tariffs announced on kitchen cabinets, bathroom vanities, upholstered furniture, and heavy trucks. The administration’s message is unequivocal: drug manufacturers must establish production facilities on U.S. soil to avoid the punitive duties, signalling a robust effort to reduce reliance on foreign pharmaceutical supply chains.

While the policy primarily targets high-value branded medicines imported from countries such as Ireland, Switzerland, Germany, and India, the immediate impact on Indian pharmaceutical exports is expected to be limited. India, often dubbed the “pharmacy of the world,” supplies approximately 40% of generic drugs sold in the U.S., and generic medicines are explicitly exempted from the tariff. However, a degree of uncertainty has unsettled markets, as some Indian companies also export branded generics and complex therapies which may now face duties depending on the classification by U.S. customs officials.

The announcement has already sparked a decline in Indian pharmaceutical stocks, with the Nifty Pharma index falling over 2%, including notable declines in shares of Sun Pharmaceutical, Dr. Reddy’s, and Cipla. Market participants remain wary of the potential for the tariff’s scope to widen and adversely affect Indian exporters more broadly. Indian government officials have indicated close monitoring of the situation, exploring whether World Trade Organization rules or bilateral trade agreements might offer some recourse against the U.S. measures.

Trump’s rationale for these tariffs centres on national security concerns, citing disruptions experienced during the COVID-19 pandemic and ongoing geopolitical tensions, especially with China. The administration urges multinational pharmaceutical companies to commence or expand production in the U.S. to secure tariff exemptions, part of an effort to rebuild the domestic manufacturing base and reduce vulnerability to international supply chain shocks. Similar tariffs on other manufactured goods underscore the administration’s wider economic strategy.

The international response has been one of alarm and scrutiny. European officials remind that existing trade agreements limit pharmaceutical tariffs to 15%, suggesting potential legal challenges under international trade law. Indian pharmaceutical associations have called on the Indian government to engage diplomatically with Washington to mitigate adverse outcomes. Singapore’s pharmaceutical sector faces similar uncertainties with $3.1 billion in exports to the U.S. threatened and is actively seeking clarifications on tariff exemptions tied to local manufacturing investments.

Economists and healthcare experts warn that these tariffs could lead to higher prices for American consumers if drug supply chains are forced to shift rapidly. There are also risks of retaliatory tariffs and broader trade disputes escalating between the U.S. and affected countries. The Indian rupee has already felt pressure, with concerns that these developments may contribute to further depreciation against the U.S. dollar, compounding economic challenges linked to other U.S. policy changes like increased H1-B visa fees.

According to the Indian Pharmaceutical Alliance, the bulk of Indian exports focused on generic drugs are unlikely to be impacted by the new tariffs. The Alliance suggests Indian firms concentrate on strengthening cost efficiencies and increasing investments in complex generics and biosimilars to remain competitive under the shifting trade landscape.

This policy shift is emblematic of the evolving geopolitics governing global pharmaceutical trade. For India, home to a $25 billion drug export industry, the true impact hinges on how narrowly the U.S. administration defines the tariff’s coverage and whether other nations adopt similar protectionist measures. While the current focus is on patented and branded medicines, a broader interpretation or extension could compel Indian companies to rethink export strategies or accelerate domestic manufacturing ventures in the U.S.

In sum, President Trump’s aggressive trade stance signals a turning point in global pharmaceutical supply chains, underscoring the growing intersection of trade policy, industrial strategy, and national security considerations. The developments warrant close observation as governments, companies, and markets adapt to the new commercial realities unfolding on the international stage.

Source: Noah Wire Services