Generic drugs imported into the United States will face zero tariffs for two years starting August 1, before sharply escalating levies take hold, President Donald Trump has announced.
Trump said a 100% tariff will take effect in August 2028, rising further to 200% a year after that, creating a strict deadline for drugmakers to act.
The phased schedule is designed to push generic drugmakers to move production onshore within the grace period provided, Trump confirmed in a social media post on Tuesday.
Trump described the escalating tariffs as “a penalty” for companies that fail to build plants and facilities in the United States before the grace period expires.
Tariffs on patented and branded drugs will remain unchanged under the new plan, Trump said, keeping the two categories of pharmaceutical products on separate regulatory tracks.
Trump had already imposed a 100% levy on patented pharmaceutical products and ingredients under Section 232 on April 2, while exempting generic drugs, biosimilars, and related ingredients at that time.
Larger drugmakers were given 120 days before the 100% tariff rate on patented products takes effect, while smaller drugmakers relying on contract manufacturers were given 180 days before that rate hits.
More than a dozen major drugmakers, including Eli Lilly, Pfizer and Novo Nordisk, have struck deals with Trump to lower prices of new and existing medicines as part of his “most favored nation” policy.
That policy ties U.S. drug prices to cheaper ones available abroad and exempts participating companies from tariffs for three years, offering a significant commercial incentive for cooperation.
The stakes are particularly high for India, whose pharmaceutical companies supply nearly 50% of all generic medicines consumed in the United States each year.
The U.S. accounts for around a third of India’s total pharma exports annually, with the trade heavily weighted toward cheaper generic versions of widely used drugs.
Chinese firms dominate the upstream supply of active pharmaceutical ingredients used in many of those generics, including widely used compounds such as amoxicillin and heparin.
Trump has used a combination of tariff threats and his most-favored-nation pricing policy to press drugmakers into charging Americans no more than patients in other high-income countries pay.