Trump clarified that “is building” will be defined as either breaking ground or being under construction. This exemption is intended to incentivize pharma firms to shift production into U.S. soil.
In the same announcement, Trump introduced additional tariffs: 50% on kitchen cabinets and bathroom vanities, 30% on upholstered furniture, and 25% on heavy trucks all effective from October 1.
Impact on Indian Pharma & Trade
India, a leading global exporter of generic medicines, faces heightened uncertainty. In Fiscal Year 2024–25, drug exports to the U.S. were estimated at around USD 10–10.5 billion constituting over one-third of India’s total pharma exports.
However, the immediate damage may be cushioned: the new tariff targets branded and patented drugs, not generics. Since India’s exports are largely generic in nature, many analysts believe the direct hit may be limited at least for now.
That said, investor sentiment reacted sharply: Indian pharmaceutical stocks fell between 2–3%, with some major firms dropping at times as much as 5%. Sun Pharma, Cipla, and Dr. Reddy’s are among the names flagged as most vulnerable.
Going forward, two risks loom large:
1. Tariff expansion: If the U.S. decides to include complex generics or specialty drugs under its tariff framework, Indian exports could face broader exposure.
2. Supply chain relocation: Indian companies with U.S. operations may accelerate capital outlays to establish or expand American production to qualify for exemptions.
In response, Indian policymakers and trade bodies are watching developments closely especially whether bilateral or multilateral negotiations can shield India’s pharma interests and preserve export resilience in a shifting trade landscape.
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