US President Donald Trump has imposed a 100 percent tariffs on the imported patented drugs and associated pharmaceutical ingredients. Trump said that generic drugs and their associated ingredients will not be subject to tariffs at this time, a move that provides a relief to the Indian drugmarkers. Despite the fact that India remains largely protected from these tariffs as 90% of the $9.7 billion pharma exports to the US constitute generics, global trade experts said that there’ always a risk that US could review its stance.
“Under current circumstances and in light of future requirements of the US, this action is necessary and appropriate to address the threatened impairment of the national security,” Trump said.
“Indian generic exports are largely protected for now. Many domestic pharma companies are establishing or expanding manufacturing in the US within the US to hedge against future tariffs risks,” said official of a trade association. There are some 30 units operated by the Indian companies – either on their own or through joint ventures – in the US, including Dr Reddy’s, Sun Pharma, Cipla and Zydus Lifesciences.
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National Security
As per Section 232 investigation, based on which these tariffs are imposed, the US found that even though it’s a world leader in pharma research and development (R&D), the country is heavily reliant on imports, threatening to limit its access to life-saving medications in the event of global supply chain disruption due to geopolitical or economic disruption.
According to the Food and Drug Administration (FDA), around 53% of patented pharma products distributed in the US are produced outside the country. The degree of import reliance is significant at the active pharmaceutical ingredient (API) level with only 15% of patented APIs (by volume) domestically produced for the US market.
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Global Fallout
The fresh tariffs are likely to hit pharma hubs like Ireland, Germany, Switzerland, UK and Japan which have a higher share of high-value drug exports to the US. Trump also said that there will be no exemptions given to the countries who have signed trade deals with the US; However, the executive order provides relief to companies by imposing 20% duty to those imports of patented products which are produced by companies that have plans, as approved by the US Secretary of Commerce, to onshore production.
TOPICSTrump TariffThis article was first uploaded on April three, twenty twenty-six, at fifty-three minutes past ten in the night.