Trump's 100% Tariffs on Branded Drugs Hit Europe Hard, Leave India Largely Unscathed

The United States has announced tariffs of up to 100% on certain branded medicines and key pharmaceutical ingredients, while exempting generic drugs, a move that leaves India largely insulated, given its dominance in low-cost generic drug exports to the US.

The tariffs, issued through a presidential order on April 2, 2026, are expected to kick in between August and September this year, following a transition period of 120-180 days. Companies that agree to cut prices or shift manufacturing to the US could face lower tariffs of 10-20%, or get exemptions altogether, according to a recent note by Global Trade Research Initiative (GTRI)

The order builds on a national security investigation launched under Section 232 of the Trade Expansion Act of 1962, which cited risks from America's dependence on foreign drug supplies. Its timing, on the first anniversary of the earlier "Liberation Day" tariff push, signals a continuation of Washington's aggressive trade strategy, the GTRI noted.

Europe, Japan Bear the Brunt

The tariffs are expected to hit Ireland, Germany, Switzerland, Belgium, Denmark, the United Kingdom and Japan hardest, as these countries are major exporters of patented, high-value drugs and biologics to the US.

Notably, the order does not exempt countries with existing trade arrangements with the US, including the European Union and Japan. Any relief will be tied to company-level compliance, not country status.

Generic medicines, which account for over 90% of US drug consumption, are exempt for now, likely for about a year, to prevent drug shortages and price spikes.

India Protected, But Not Without Risk

For India, the immediate impact is limited. Around 90% of India's pharmaceutical exports to the US are generics, which remain exempt under the new order, the note added. In 2025, India exported $9.7 billion worth of pharmaceuticals to the US, making up 38% of its total global pharma exports of $25.8 billion.

However, Indian firms that produce branded or specialty drugs, or supply inputs used in patented medicines, could face tariff pressure. The bigger concern, according to the note, is the possibility of tariffs being extended to generics in the future.

US Seeks Price Cuts, Local Manufacturing

The GTRI report said the US is using tariffs primarily as a pressure tool rather than a revenue measure. Washington's goals are to push drugmakers to lower prices in the American market, shift some production to US soil, and gain greater control over critical pharmaceutical supply chains, treating the sector as strategically important, much like semiconductors.

Multinational pharmaceutical companies, particularly in Europe and Ireland, are expected to respond pragmatically. Many may offer limited price reductions or selective investments in US facilities to negotiate lower tariff rates, rather than agreeing to broad global price cuts. Some firms could expand final-stage manufacturing or packaging in the US to qualify for exemptions while keeping core production in Europe, GTRI further said.

Court Ruling Shifts Legal Tool, Not Strategy

With the US Supreme Court striking down the earlier reciprocal tariffs, Washington is expected to rely more heavily on Section 232 (national security) and Section 301 (foreign trade barriers) to justify tariffs on a wide range of products and countries. In effect, the court's decision has not changed the tariff strategy, it has only pushed the administration to shift its legal basis, the GTRI report said.

This creates a deeper problem for US trading partners, the report warned. Even countries that sign trade deals with Washington are not shielded from such actions, as national security investigations can be launched irrespective of existing agreements.

As the report put it, if partners must still face tariffs and investigations after making major concessions, the real value of entering into trade deals with the US becomes questionable.