US plans pharma tariffs on China, India eyes opportunity

New Delhi: The United States is preparing to raise tariffs on pharmaceutical products, especially those imported from China, within the next month or two, according to Commerce Secretary Howard Lutnick. Speaking to a media outlet on Sunday, Lutnick emphasised the need for domestic production of essential items.

“We can't be relying on China for fundamental things that we need such as our medicines and our semiconductors which need to be built in America,” he said. He added, “We can't be beholden and rely upon foreign countries for fundamental things that we need.”

Tariffs linked to national security

Lutnick’s remarks followed President Donald Trump’s recent announcement at the National Republican Congressional Committee that the US would soon introduce a “major” tariff on imported pharmaceuticals.

“This is not like a permanent sort of exemption. He's just clarifying that these are not available to be negotiated away by countries. These are things that are national security that we need to be made in America,” Lutnick noted.

Pharma industry may face disruption

So far, pharmaceutical imports have largely been excluded from broader US tariff measures, as the healthcare system depends heavily on low-cost generic drugs from countries like China and India. This has helped balance the high prices charged by US multinationals, which often put essential medicines out of reach for ordinary consumers.

With the US and China currently embroiled in a trade war, Chinese pharmaceutical exports appear to be the immediate target. Industry sources suggest this may increase short-term reliance on Indian generic drugs.

India's role in supplying generics

India supplies more than 45 percent of the generic medicines used in the US. Major Indian pharmaceutical firms — including Dr Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma, and Gland Pharma — generate up to half their revenue from the American market.

India’s pharmaceutical sector remains closely tied to the US. In FY24, the US accounted for $8.7 billion of India’s total $27.9 billion in pharma exports, according to the Pharmaceuticals Export Promotion Council of India.

Concerns over price rise and shortages

Given the US’s strong dependence on Indian generics, imposing duties could lead to higher prices and potential shortages of vital medicines, particularly antibiotics and common treatments.

Additionally, India and the US are currently in discussions for a bilateral trade agreement. It is expected that the affordability of essential generic medicines for American consumers will be a key factor in the ongoing negotiations.