Trump announced that companies that do not move generic drug production to the U.S. will face a 100% tariff in 2028, with the rate doubling to 200% a year later. This "graduated pressure" policy targets the global pharmaceutical supply chain, with India's generic drug industry being the first affected.
Starting in August 2028, generic drug manufacturers that do not move production to the United States will face a 100% import tariff. President Trump made this statement on social media on Tuesday, saying companies will have two years to complete the relocation of their production.
According to him, this tax rate will be increased further after one year. By August 2029, the aforementioned tariff will double to 200%.
Trump wrote in the post: "This move aims to bring generic drug production back to the United States and impose penalties on companies that fail to build factories and purchase equipment within the specified timeframe." He also stated that the government’s tariff plan for branded drugs remains unchanged; the plan proposes imposing tariffs of up to 100% on certain imported drugs, but includes several significant exceptions.
In April this year, the Trump administration initiated an investigation into the pharmaceutical industry under Section 232 of the Trade Expansion Act, citing national security concerns. Trump has long urged pharmaceutical companies to increase production within the United States, and the imposition of delayed-effective high tariffs on generic drugs is seen by outside observers as further pressure in this direction.
As the 2026 midterm elections approach, Trump has identified drug costs as one of the key sources of public concern over affordability. He has long criticized the fact that U.S. consumers pay higher prices for medications than those in overseas markets and has repeatedly pushed to narrow this gap; the current administration has recently launched TrumpRX, a direct-to-consumer drug discount platform.
The White House has previously used the strategy of delaying tariff implementation multiple times: setting a future effective date and using the looming deadline as leverage to negotiate subsequent arrangements with countries and companies. The design of this tariff on generic drugs follows the same approach.
Generic drug manufacturers face greater pressure, with India being the most affected.
Generic drug manufacturers have less room for maneuver compared to brand-name drug manufacturers. They typically compete on thin profit margins and rely heavily on globalized production systems, making it difficult for them to absorb additional tariff costs on their own.
Among global pharmaceutical giants, companies including Merck & Co. and Eli Lilly & Co. have avoided punitive measures targeting patented drugs through agreements with the U.S. government. Generic drug manufacturers, however, lack similar safeguards and have become the primary targets of this policy round.
Richard Saynor, CEO of Sandoz Group AG, one of the world’s largest generic drug manufacturers, warned last year that a shift toward high tariffs in the United States could drive up drug prices and reduce patient access. Like Teva Pharmaceutical Industries Ltd. and Viatris Inc., Sandoz specializes in generic versions of branded drugs after their patents expire; several of its generic medicines are manufactured outside the U.S., with production facilities in Canada and Austria.
Among U.S. trade partners, India is likely to be the most significantly affected. India is the United States' largest exporter of generic drugs. According to data from India’s Ministry of Commerce, pharmaceuticals rank among India’s top three export commodities to the U.S., with exports reaching $10.5 billion in the 2024-25 fiscal year.
If drug tariffs proceed according to Trump’s latest statements, more than 40% of India’s exports to the U.S. would face adverse impacts, compounding the existing tariffs on steel, aluminum, and automobiles. However, it remains unclear how much of the tariff burden Indian pharmaceutical companies will ultimately bear, as the trade agreement reached between the two countries in February stipulates that India will secure negotiated gains in generic drugs and active pharmaceutical ingredients.
Bloomberg News, based on data provided by the healthcare intelligence firm Symphony Health, previously reported that Trump’s prior threats to impose tariffs on drug imports have put the supply of inexpensive medications from India at risk, with the most affected being commonly used oral contraceptives, hypertension treatments, and antidepressants.
This analysis shows that approximately 65% of all oral contraceptive prescriptions in the United States in 2024 were produced by just two Indian pharmaceutical companies: Glenmark Pharmaceuticals Ltd. and Lupin Ltd. This means that if tariffs increase costs or disrupt the supply chain, the price and availability of these essential medications could be directly affected.
Meanwhile, the White House is also advancing alternative measures to replace Trump’s previous emergency tariff system, after the Supreme Court ruled earlier this year that those emergency tariffs were unlawful, prompting the administration to seek new avenues for implementation.
Currently, the comprehensive 10% tariff rate will expire on Friday. The U.S. government is expected to reimpose tariffs on products from dozens of trading partners before the end of this week, citing lax foreign labor standards, to avoid a gap between the two policy phases and preserve the continuity of the existing tariff framework. The timing of this arrangement is critical.
Sources emphasized that the plan has not yet been finalized and details may still be adjusted. Last month, the Trump administration proposed a new tariff plan targeting 60 trading partners, aiming to impose at least a 10% tariff on the grounds that these economies have been criticized for lax standards on forced labor. However, it remains unclear whether the final rates will deviate from the initial proposal.