Trump's 100% pharma tariff kicks in today, select Indian drugs get relief

The US’s 100 per cent tariff on specified patented pharmaceutical products and their associated ingredients takes effect for more companies on Tuesday, but qualifying speciality medicines from India will be eligible for zero duty.

The US Department of Commerce’s Bureau of Industry and Security (BIS), in a September 23 notice published in the Federal Register, listed India among 20 jurisdictions eligible for zero-tariff treatment.

The exemption covers a range of speciality pharmaceuticals, including rare-disease drugs for which all approved uses are designated as orphan indications that treat rare diseases, as well as nuclear medicines that use safe amounts of radioactive substances, plasma-derived therapies, fertility drugs, cell and gene therapies, and antibody-drug conjugates. It also includes medical countermeasures for chemical, biological, radiological and nuclear threats, along with animal health products. The exemption extends to ingredients used in these products.

The zero tariff comes with conditions laid down in the April presidential proclamation. For the specified speciality categories, the Commerce Department can apply the zero rate if the products originate in a jurisdiction that has a current or forthcoming trade and security framework agreement with the US, or if they are considered necessary to meet an urgent US health need.

Apart from India, the eligible jurisdictions are Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the UK and Vietnam.

What still faces the 100 per cent tariff?

The 100 per cent tariff applies to specified patented pharmaceutical products and the pharmaceutical ingredients covered by the US tariff regime, unless they qualify for another tariff treatment or exemption. The original April presidential proclamation imposed the duty under Section 232 of the US Trade Expansion Act of 1962.

The exemption, therefore, is not a blanket waiver for Indian pharmaceutical exports. Patented medicines outside the specified zero-tariff categories continue to face the 100 per cent tariff unless they qualify for another tariff treatment or exemption.

However, generic medicines are treated differently. The Commerce Department notice says generic pharmaceutical products and their associated ingredients are not covered by the Section 232 pharmaceutical tariffs. It also defines pharmaceutical articles to include finished medicines, active pharmaceutical ingredients and key starting materials, while excluding inactive ingredients and excipients.

The 100 per cent tariff is thus mainly relevant to covered patented medicines and associated ingredients, rather than generic drugs. Companies with approved arrangements to shift manufacturing to the US may also be subject to different tariff treatment under the April proclamation.

US President Donald Trump announced the broader tariff in April as part of efforts to encourage pharmaceutical manufacturing in the US. It took effect on July 31 for companies covered under one annex to the proclamation and will apply from September 29 to other companies within the scope of the Section 232 pharmaceutical tariff regime.