Trump admin puts 100% pharma tariffs on hold but uncertainty looms

The US administration under  President Donald Trump has delayed its plan to impose a 100 per cent tariff on drugmakers that are not manufacturing products in the country, The Hill reported. The tariffs, which were set to come into effect on Wednesday (local time), have been postponed indefinitely, with officials saying the new tax is still being prepared.

 

Last week, Trump took to his private social media platform, Truth Social, to announce a 100 per cent tariff on pharma and said, “Starting October 1, 2025, we will be imposing a 100 per cent tariff on any branded or patented pharmaceutical product, unless a company is building their pharmaceutical manufacturing plant in America. There will, therefore, be no tariff on these pharmaceutical products if construction has started."

 

 

The announcement made on September 26 allowed the companies only a week to prepare for a steep new tax on imported goods, while supply chain experts questioned how the policy could realistically be enforced.

 

Why did Trump propose tariffs on pharma companies?

 

According to Trump, the 100 per cent tariff aimed to encourage companies to build their manufacturing plants in the US, boost domestic production, and reduce dependence on foreign suppliers.

 

The US Commerce Department is reportedly still evaluating proposals made by drugmakers to reshore manufacturing and lower prices.

 

Will Trump administration offer grace?

 

Earlier on Monday (local time), the Trump administration hinted that it would offer some grace to the companies in terms of enforcement.

 

US Commerce Secretary Howard Lutnick said, "So, while we’re negotiating with these companies, we’re going to let them play out and finish these negotiations. Because they are the most important thing to the American people. So we are standing by, helping and working with them."

 

Officials confirmed that these additional tariffs are being imposed under Section 232 of the Trade Expansion Act of 1962, which authorises the President to restrict imports deemed a threat to national security.

 

Earlier this year, the US Commerce Department also initiated an investigation into the national security impact of importing pharmaceutical and pharmaceutical ingredients. Citing experts, the report added that the investigation has strengthened the importance of these tariffs.

 

Tariffs postponed, not cancelled

 

The Trump administration has clarified that while these tariffs might not be enforced immediately, they are still in play and can be implemented in the near future.

 

Citing a White House official, the report added, "As Secretary Lutnick made clear in the Oval Office today, starting October 1, the Trump administration will begin preparing tariffs on pharmaceutical companies that do not begin on-shoring their manufacturing or participate in the President’s Most Favored Nations push to reduce drug prices", adding, "President Trump is wholeheartedly committed to lowering drug prices for Americans and will not hesitate to utilize tariffs to do so."

 

Trump to offset tariff impact on US consumers

 

In an attempt to lower the tariff impact on pharma imports for American consumers, the White House recently announced that the administration is planning to unveil a direct-to-consumer website called TrumpRx.

 

Consumers would be able to directly purchase medicines from this website at lower prices, a Reuters report added. Pfizer, among the world’s biggest and most profitable drugmakers, plans to offer certain medicines directly to consumers through the platform.

 

Impact of pharma tariffs on Indian drugmakers

 

Business Standard reported last week that the Indian drugmakers are unlikely to be affected by Trump's 100 per cent tariffs on branded or patented pharmaceutical imports as they largely supply generic drugs to the US.

 

However, companies like Sun Pharma, Biocon, Aurobindo Pharma, and other Indian majors in the US branded drugs market may face some “negative impact".