Insights

In 2002, American manufacturers made about 83% of the pharmaceuticals used in the country. By 2024, this dropped to just 37%, showing a clear shift toward greater dependence on foreign suppliers.²

The Trump Administration has recently turned its attention to generic pharmaceuticals as a potential target of for new tariff actions. On July 21, 2026, President Trump announced on Truth Social a plan to impose tariffs on imported generic drugs beginning with a 0% tariff rate on August 1, 2026. The proposed tariff rate will then increase to 100% in August 2028 and 200% the following year. The goal is to encourage pharmaceutical companies to move production to the United States, showing the Administration’s willingness to use tariffs to shape investment in key industries.

So far, the White House has not released an official proclamation or notice to implement this policy, which leaves some doubt about whether the tariffs will go into effect. Still, the impact on U.S. consumers and businesses could be major. About 91% of all prescriptions in the U.S. are for generic drugs, and many of these are produced abroad.³

These tariffs would likely have the heaviest impact on India, since it supplies a large share of the generic medicines the U.S. imports. India’s Commerce Ministry describes pharmaceuticals as among the country’s largest share of exports to the U.S., totaling about $10.5 billion in FY2024.⁴ If the tariffs go ahead, both Indian drugmakers and U.S. companies that depend on their supply could see higher costs and more uncertainty.

The Administration may try to impose these tariffs under Section 232 of the Trade Expansion Act, arguing that reliance on foreign pharmaceutical supply chains poses a national security risk. Factories in India, Europe, and China make more than half of the generic drugs used in the U.S., and many foreign manufacturers depend on China for over 70% of the active ingredients (APIs) needed to make these drugs.⁵ Since China leads in producing key ingredients, the Administration could argue that reducing reliance is important for supply-chain resilience and national security.

Whether or not the 100% tariff is put in place as described, the President’s proposal evidences a broader shift in how the Trump Administration handles pharmaceutical trade. Many in the industry see the proposal as a starting point for talks, not a final decision. As one analyst put it, the announcement could be “a catalyst”⁶ for discussions with drug companies about pricing and expanding manufacturing in the U.S., much like earlier deals with brand-name drugmakers:

• September 2025: The administration reached a deal with Pfizer to lower U.S. drug prices to match those in other developed countries. The agreement also linked trade policy to benefits for U.S. patients.⁷

• December 2025: The Administration announced new agreements with companies like Amgen, Bristol Myers Squibb, Gilead Sciences, GSK, Merck & Co., Novartis, Sanofi, Genentech, and Boehringer Ingelheim to lower prices.⁸

Even if the proposed tariffs are changed or dropped, the announcement makes it clear that the Administration plans to use trade policy to influence drug prices, supply chains, and U.S. manufacturing capacity. Furthermore, this announcement was posted just days before the temporary 10% global tariffs imposed under Section 122 of the Trade Act of 1974 were set to expire after reaching the statutory 150-day limit, and the Administration cannot unilaterally extend them beyond that period. In light of these recent tariff shifts, the proposed pharmaceutical tariffs reflect the Administration’s continued effort to use trade tools to reshape critical supply chains.

***

The team at Torres Trade Law, PLLC, regularly advise U.S. and foreign companies on international trade matters, including tariffs, customs compliance, export controls, sanctions, supply chain risks, and national security-related trade issues. If you have questions about how evolving U.S. trade policies, including new tariff measures, may affect your business, please contact our attorneys for assistance.