Trump's tariff war threatens to disrupt pharma supply chain

After pulling US funding from the World Health Organisation (WHO), the US President Donald Trump has now announced a 25 per cent tariff on pharmaceutical imports. With countries like India and China being major suppliers to the U.S. market, this move raises serious concerns about the future of drug prices, supply chains, etc. Let's analyse how this could impact the global pharmaceutical industry.

- Ayesha Siddiqui

Import tariffs have emerged as a key trade issue since President Donald Trump took office on January 20, 2025. Among the many measures announced, Trump has pledged to impose a 25 per cent tariff on all imports, including pharmaceutical products. President Trump indicated that pharmaceutical-specific tariffs could be enforced as early as April 2, 2025.

Pharmaceutical supply chains are heavily reliant on international trade, with China and India providing more than 70 per cent of the active pharmaceutical ingredients (APIs) used in U.S. drug manufacturing. In 2023, the US spent more than $2.02 billion on pharma imports from China alone, according to the U.S. Trade Commission. India exports an approx. 47 per cent of the generic drugs to the US. This helps to bring the cost of drugs down for the US consumers. The US largely exports patented and innovative drugs to India that values around $800 million. The introduction of tariffs could disrupt these supply chains.

Rising production costs due to these tariffs are expected to lead to higher drug prices. Generic drug manufacturers, which often operate on slim profit margins, are likely to be hit hardest. While the 10 per cent tariff on Chinese goods may not have a major impact on branded drugs, generic companies are expected to face significant challenges. Increased API costs could force some manufacturers to reduce output or exit the market entirely, reducing competition and potentially driving up prices.