In a surprising escalation, US President Donald Trump has warned of imposing steep tariffs on the pharma sector—just hours after exempting the category from his sweeping 26 per cent reciprocal tariff on Indian imports. Speaking to reporters aboard Air Force One, Trump said that pharmaceuticals are being reviewed as a separate category and that tariffs “at levels you haven’t really seen before” could be announced “sometime in the near-future.”
The reversal comes amid heightened trade tensions, following the White House’s announcement of new reciprocal tariffs on India. Trump accused India of imposing disproportionate duties—up to 52 per cent—on American goods, while also engaging in currency manipulation and using non-tariff barriers to restrict trade. In the initial rollout, key sectors such as pharmaceuticals, semiconductors, critical minerals, and energy had been exempted from the new tariffs.
The White House had detailed these exemptions in a factsheet, noting that products falling under specific categories—including copper, certain minerals, pharmaceuticals, and energy—would not be immediately subject to the new levies. These exclusions were seen as a relief for sectors with deep US-India trade links, particularly pharmaceuticals.
However, Trump’s latest remarks now cast uncertainty over the sector’s future. “We are looking at pharmaceuticals as a separate category,” he said, adding that the announcement could come soon. The statement has already unsettled stakeholders in both markets, especially given the strong trade volumes between the two countries.
India’s Pharma Trade Could Be Caught in the Crosshairs
India exported $8.7 billion worth of pharmaceutical products to the US in 2023–24, while importing approximately $800 million. The sector, a cornerstone of India’s export economy, plays a critical role in supplying affordable generic medicines to the US, including a large portion of essential drugs.
Following the initial announcement of the exemptions, Indian pharmaceutical stocks surged in relief. But the sudden pivot in tone from the US President has once again put the sector on edge.
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Market observers and policy analysts have warned that while the exemptions were a welcome move, they were never guaranteed to last. “The exemption of key Indian exports such as pharmaceuticals, semiconductors, and certain minerals from reciprocal tariffs under Section 232 is a relief. However, these exemptions should be viewed with caution,” said Manish Goel, Founder and MD of Equentis Wealth Advisory Services.
He added that strategically significant industries like pharmaceuticals could still face policy shifts. “Essential drug categories may still come under scrutiny, with targeted tariff adjustments being a real possibility,” he noted.
What’s Driving the Policy Change?
The White House has maintained that the goal of the reciprocal tariffs is to level the playing field and ensure American exports receive the same treatment abroad that the US offers to foreign goods. However, with an election year underway, analysts believe these moves may also be politically motivated—designed to appeal to domestic manufacturers and trade hardliners.
Pharmaceuticals, long seen as an area of strong US-India cooperation, may now become a flashpoint in broader trade negotiations. Any shift in tariff policy could not only disrupt supply chains but also raise the cost of medications in the US, where Indian drug makers account for a large share of the generics market.
What Happens Next?
While the exact nature of the proposed pharma tariffs remains unclear, the Biden administration—or a second Trump term—could still alter the course of trade policy depending on negotiations and industry feedback.
For now, Indian exporters remain cautious, balancing optimism over short-term exemptions with concern about longer-term uncertainty. With nearly $9 billion in annual trade at stake, the sector will be watching closely for any official announcement in the coming days.
