‘Pharmaceutical Tariffs Coming in
Next Month or Two’: Howard Lutnick Signals Imminent
Tariffs on Imported Medicines
·
In
FY24, the U.S. accounted for $8.7 billion of India’s total $27.9 billion pharma
exports, according to the Pharmaceuticals Export Promotion Council of India.
“Pharmaceutical tariffs also coming in next
month or two,” said U.S. Commerce Secretary Howard Lutnick
during an interview with ABC News on Sunday (13.04.2025).
"We
can't be relying on China for fundamental things that we need: our medicines
and our semiconductors need to be built in America," Howard
"We
can't be beholden and rely upon foreign countries for fundamental things that
we need," he said. "So 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."
This
statement came just days after President Donald Trump declared a fresh trade
offensive. Speaking at the National Republican Congressional Committee, Trump
confirmed the U.S. will soon impose what he described as a “major” tariff on
imported drugs.
For
years, pharmaceuticals were kept outside the White House's broader tariff war,
but that exemption now appears to be ending. This shift could bring significant
consequences, especially for countries like India, which are tightly
intertwined with the U.S. drug market.
India’s pharma sector in
the firing line
India's
pharmaceutical industry is closely linked to the United States. In FY24, the
U.S. accounted for $8.7 billion of India’s total $27.9 billion pharma exports,
according to the Pharmaceuticals Export Promotion Council of India.
More
than 45% of the generic drugs used in the U.S. are made in India. Add to that
15% of biosimilars, and the exposure becomes clear. Industry giants such as Dr
Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma earn
up to half of their revenues from American consumers.
Now,
all eyes are on the tariff decision. If enacted, it could put pressure on an
already stretched system.
“It
will impact both countries”
As
reported by Reuters, analysts are warning that these tariffs could cause pain
on both sides.
“In
case the U.S. starts imposing tariffs on the pharma sector, it will impact both
countries,” analysts at HDFC Securities told Mint.
The
U.S. relies heavily on low-cost Indian generics. Imposing new duties could push
up prices, worsen inflation, and trigger shortages of essential drugs—
especially antibiotics and common treatments. Indian drugmakers, already
operating on narrow margins in the generics space, may be unable to absorb the
added costs. Many would likely pass them on to insurers and patients in
America.
Trump wants drugs made in
the US
Trump
has repeatedly argued that major pharmaceutical firms should bring their
production back home. His key targets include U.S. giants like Eli Lilly,
Johnson & Johnson, and Pfizer.
At
the April 2 tariffs announcement, Trump claimed, “The U.S. no longer produces
enough antibiotics.” He said this dependency on India and China must end.
Ireland,
in particular, came under fire from Trump for acting as a production base for
brand-name drugs, thanks to its low tax rates. He also took aim at American
pharma firms for registering intellectual property overseas to reduce tax
burdens.
“These
other countries are smart,” Trump said on Tuesday. “They say you can’t charge
more than $88 otherwise you can’t sell your product, and the drug companies
listen to them.”
Unlike
Britain or Germany, the U.S. does not operate a centralised health system.
Instead, pricing is managed by a patchwork of private insurers and government
programmes like Medicare. Recent reforms under President Biden have introduced
limited price negotiations, but the system remains largely market-driven.
Industry pushback and
strategic stockpiling
Big
Pharma isn’t taking the threat lightly.
According
to Reuters, major drugmakers have lobbied Trump to phase in the new rules
gradually, giving them time to shift operations. Eli Lilly and others have
since announced fresh investments to expand domestic manufacturing capacity.
Novo Nordisk is also exploring ways to make more medicines in America.
But
building new facilities isn’t easy. Industry group PhRMA estimates that it can
take 5 to 10 years and up to $2 billion to set up a plant that meets all regulatory
requirements.
Some
companies, anxious about delays, have already begun flying in bulk stock from
Europe to build inventories before the tariffs land.
Timeline still unclear
amid policy whiplash
Although
Trump said the pharma tariff announcement would come “very shortly”, the exact
timeline remains hazy.
The
White House recently listed pharmaceuticals under Section 232 of the 1962 U.S.
Trade Act. That triggers a Commerce Department investigation into whether drug
imports pose a threat to national security. Such probes can take up to 270
days.
At
the same time, Trump added to the confusion by announcing he would ease some
new tariffs on other countries—even as he doubled down on China.
Risks for innovation and
supply chains
Industry
insiders say the fallout could be severe. Not just for generics, but for
innovation.
Margins
for high-end branded drugs could shrink under tariffs, leaving less cash for
research and development. "The risk is not only about access, it’s about
future breakthroughs," one executive warned.
And
with generic makers unable to sustain production at higher costs, essential
drugs could vanish from the shelves—particularly those used to treat infections
and chronic diseases.
For
India, the stakes are high. Pharma exports are a vital economic driver, and the
U.S. remains its biggest market. For the U.S., the goal is domestic self-
reliance—but not at the cost of accessibility or affordability.
As
the world’s drug supply chains brace for impact, the coming weeks could decide
whether patients or politics will shape the future of medicine.