Why did Donald Trump exempt pharmaceuticals from reciprocal tariffs? Expert explains
The US has exempted pharmaceuticals from reciprocal tariffs, highlighting India's crucial role in global healthcare, as Indian firms supply affordable medicines and contribute significantly to US healthcare savings.
The United States has exempted pharmaceuticals from the recently announced reciprocal tariffs, a move underscoring the critical role of generic medicines in global healthcare, Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain said on Thursday.
President Donald Trump, in a historic measure to counter higher duties on American products imposed globally, on Wednesday announced reciprocal tariffs on about 60 countries. He announced 27 per cent reciprocal tariffs on India, saying New Delhi imposes high import duties on American goods.
Latest Videos
However, pharmaceuticals and other essential items are exempted from the increased import duty.
"The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security," Jain said in a statement.
Strengthening Indo-US Trade Ties
India and the US share a strong and growing bilateral trade relationship, with a shared vision to double bilateral trade to USD 500 billion under the 'Mission 500' initiative. "Pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and US healthcare by ensuring a steady supply of affordable medicines," Jain added.
The Indian pharmaceutical industry is committed to advancing the shared priorities of both nations. "Strengthening medicine supply chain resilience and reinforcing national security by ensuring access to affordable medicines for all," Jain noted.
IPA is a network of the top 23 Indian pharma companies, including Sun Pharma, Dr Reddy's Laboratories, Lupin, Torrent, and Glenmark.
India's Pivotal Role in US Healthcare
The pharmaceutical sector, India's largest industrial export, was estimated at USD 12.72 billion in 2024. Indian pharmaceutical companies supply a substantial proportion of drugs to US residents, with four out of ten prescriptions filled in the US in 2022 being supplied by Indian firms.
As per industry sources, medicines from Indian companies provided USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022. Generics from Indian companies are expected to generate an additional USD 1.3 trillion in savings over the next five years.
Impact on Indian Pharma Sector
Sector experts had earlier noted that the enhanced tariffs on pharma imports in the US could severely impact Indian drug manufacturers, leading to higher production costs and making shipments less competitive against products from other countries.
Smaller drug firms operating on thin margins could face severe financial pressure, potentially forcing consolidation or closure, they had opined.
The exemption ensures that Indian pharmaceutical companies can continue to supply cost-effective medicines to the US without additional financial burdens, reinforcing India's role as a key player in global healthcare.
subscribe to Asianet Newsable WhatsApp channel by clicking here.