US President Donald Trump has delivered another bombshell announcement. He declared that a 100% tariff will be imposed on all branded or patented medicines imported into the United States starting October 1st. Trump's decision is expected to have a severe impact on Indian companies. However, he clarified that companies that have started building manufacturing units in the US will be exempt from this tariff. Trump announced this on his social media platform, 'Truth Social'. Just as businesses were getting used to the initial tariffs, Trump is causing a stir with new ones.
"We will impose a 100% tariff on branded and patented pharmaceutical products from any company that has not built a manufacturing plant in the USA, starting on October 1st. There will be no tariff on products from companies that are currently under construction," said Donald Trump.
Trump has long been pressuring companies to set up production centers in the US. He has consistently argued that imposing tariffs can force companies to invest more in domestic factories. Trump has dismissed fears that importers would pass on the burden of these taxes to consumers and businesses in the form of higher prices.
Impact on the Indian Pharma Sector
The US is the primary market for the Indian pharmaceutical industry, with 40% of India's drug exports going to the US. In this context, the 100% tariff to be imposed by the US is expected to have a severe impact on India's pharmaceutical industry. A report released by SBI Research in August of this year stated that if tariffs are imposed on the pharmaceutical sector, it could significantly affect the revenues of Indian pharma companies. The report estimated that if Trump were to impose a 50% tariff on Indian pharma exports, the revenues of pharma companies could decrease by 5 to 10% in the 2026 financial year. This is because many large Indian pharma companies derive 40 to 50% of their total revenue from the US market. Due to the tariffs, Indian products could lose their presence in the world's largest pharmaceutical market like the US. Companies' profits could also decrease significantly as they would not be able to pass the increased costs on to consumers.
Tariffs on Other Products as Well
In addition to pharmaceuticals, Trump also announced tariffs on other household products. He stated that starting October 1st, he will impose import duties of 50% on kitchen and bathroom accessories, 30% on upholstered furniture, and 25% on heavy trucks. He explained that foreign furniture companies are flooding the US market and that heavy tariffs are necessary for national security reasons. Trump also said that foreign-made trucks and parts are hurting domestic manufacturers. Trump argues that the new tariffs will increase domestic manufacturing and help reduce the government budget deficit.
Although Trump has repeatedly said that inflation is not a problem for the US economy, it is noteworthy that the country's price index has increased by 2.9% in the last 12 months. These tariffs are likely to further increase construction costs for many people looking to buy a home, as people are already struggling with a housing shortage.