Tariffs, Trade & Triumph: The Indian Pharma Response to Trump’s Policies

From tariff shocks to “Buy American” pressures, Trump’s policies tested Indian pharma’s resilience. Yet, in the world’s largest drug market, those very challenges opened new doors for agile players to emerge as leaders.

1. Introduction 

India and the US have a strong, enduring global partnership, encompassing trade and strategic alliances in defense, technology, services, and healthcare. The pharmaceutical sector is crucial to this bilateral relationship, with India supplying 40-50% of the generic drugs needed by the US. This smooth collaboration has consistently lowered healthcare costs for the US, while solidifying India's position as the "global pharmacy of the world."

India’s pharmaceutical industry is vital to the US generic drug supply, accounting for half of the country’s prescriptions. The interdependence highlights the changes in US trade policy that will impact Indian manufacturing, supply chains, and American healthcare. During Trump's previous tenure (2017-2021), the roadmap was executed, now known as the Trump Tariff.

• Tariffs imposed under Section 301 on Chinese APIs led to an increase in raw material expenses

• The cost of equipment and packaging rose due to tariffs on steel and aluminum.

• India's exclusion from the GSP program in 2019 resulted in the loss of specific tariff advantages.

• "Buy American" policies impacted how federal agencies procured essential medicines.

For Indian manufacturers, these measures led to reduced profit margins, increased regulatory hurdles, and the need to adjust supply chains. In 2025, the lasting impact of Trump's tariffs on Indian pharmaceutical companies is less about direct duties on medicines and more about the less obvious expenses related to inputs, packaging, and procurement regulations. This necessitates that Indian pharma prioritize resilience and strategic regulatory approaches to navigate the evolving trade landscape. At Walter Healthcare, we have extensively analyzed this evolving policy landscape.  We guide Indian pharma companies in understanding U.S. trade & regulatory frameworks, and in exploring partnership pathways to access the U.S. market. This blog post uses that knowledge to provide a global case study, detailing the timeline of Trump's trade policies, their impacts on Indian pharma, and offering strategic options for companies to remain resilient in a tariff-sensitive global environment.

2. Process timeline (Time that defines what happened and when)

• 2017: Executive Order 13788 “ Buy American and Hire American,” focusing on domestic preferences in federal purchasing. Later, the Biden government revoked and replaced the order with EO 14005, with the tightened Buy American rules via the Federal Acquisition Regulation (FAR). 

• 2018:  Section 232  tariffs additional 25% on steel and 10% on aluminium, leading to the sudden cost rise for stainless vessels, equipment, cans, blisters, and other packaging inputs. Tariff rates quotes (TRQs)/ waivers later adjusted for allies. 

• 2018-2019: Section 301 (China)-Tariffs have been imposed on thousands of Chinese goods, categorized into four lists, with ongoing periodic exclusions. These tariffs have impacted certain pharmaceutical-related inputs, including chemicals, devices, and intermediates.

• 2019 (March-June): The termination of India's Generalized System of Preferences (GSP) status has eliminated duty-free access for 2,000 product lines, thereby altering the compliance considerations for trade between India and the US.

• August 2020: Executive Order 13944 focused on the "Buy American" initiative for essential medicines. It mandated the FDA to identify and list critical medicines and inputs for domestic production.

• 2021-2024: Executive Order 14005 Biden tightens Buy American content threshold via FAR 60% (2022-23), 65% (2024-28), 75% (2029). Procurement preference shifts, but the tariff schedule itself for most finished drugs remains “free” under the WTO pharma. 

• 2024-2025: Renewed talk of tariffs on pharmaceutical imports and national security probes; industry and markets model potential impacts if implemented.

3. What changed under Trump

The Trump administration significantly altered global trade regulations, and the pharmaceutical industry was no exception. Indian drug manufacturers, in particular, faced a complex environment of increased costs and compliance challenges due to measures such as steel tariffs, duties on Chinese goods, and shifts in procurement policies.

• Section 232 for Rising Steel and Aluminium prices

In 2018, U.S. tariffs on steel and aluminum (25% and 10% respectively, under Section 232) inadvertently raised costs for Indian pharmaceutical manufacturers exporting to the U.S. Increased prices for stainless steel tanks, reactors, and packaging components led to higher capital expenditure and reduced profit margins for generic drugs.

• Section 301 Leading to Uncertain and Pricier Chinese Inputs

The implementation of Section 301 tariffs on Chinese goods has led to increased complexity and higher costs for various pharmaceutical inputs and device components previously sourced from China, including Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), and reagents. This indirect burden has also impacted Indian finished goods exports, as intermediate products from China have become more expensive. Furthermore, Washington's frequent changes to tariff exclusions have created substantial planning uncertainty for supply chains.

• Removal of GSP Benefits of India 

The Generalized System of Preferences (GSP) is the incentives provided by the developed nations to the developing countries with reduced or zero import duties to enhance their exports and to give them better market access. In 2019, India was formally removed from the US GSP, although it will not directly affect most finished pharmaceutical exports; it did raise tariffs on other non-pharma products, accessories, and packaging materials. Of greater significance, it generated administrative friction, indicating a more challenging trade landscape for India across various sectors.

• Executive Order 13944 + FAR Changes (“Buy American” for Essential Medicines)

Executive Order 13944, issued in August 2020, prioritized domestic manufacturing of essential medicines and medical devices for U.S. agencies. Subsequent updates to the Federal Acquisition Regulation (FAR) increased domestic content requirements for government procurement to 60% (2022), 65% (2024), and 75% (2029). This shift in focus has led Indian exporters to prioritize private sector sales over federal contracts, which increasingly require U.S.-based manufacturing or partnerships.

4. U.S. Tariff & Trade Framework: Impact on Indian Pharmaceuticals

Finished Drugs: Duty-Free Under Global Rule

• Policy: Indian finished dosage forms (FDFs) maintain duty-free entry into the U.S. This is facilitated by the WTO Pharmaceutical Agreement ("zero-for-zero" initiative) and specific provisions within Chapter 30 of the Harmonized Tariff Schedule of the United States (HTSUS).

• Technical Idea: Products identified with a "K" designation in the HTSUS are part of the Pharmaceutical Appendix. This grants them duty-free access when listed by their International Nonproprietary Name (INN) or Chemical Abstracts Service (CAS) number.

Trade Data & Impact:

• 2024 Exports: India's pharmaceutical exports to the U.S. reached $12.8 billion in 2024. Significantly, over 80% of these were finished generics, qualifying for 0% tariffs.

• Market Strength: This tariff-free access allowed India to maintain strong pricing power and substantial market share.

• U.S. Reliance: According to reports, Indian generics comprised 47% of all U.S. prescription volumes in 2024, underscoring the continued reliance of the U.S. market on Indian pharmaceutical products.

Active Pharmaceutical Ingredients (APIs): Duty-Free If Listed

• API Tariff Policy: Active Pharmaceutical Ingredients (APIs) not listed in the Pharma Appendix are subject to Most Favored Nation (MFN) tariffs ranging from 0% to 6.5%. The USTR and USITC regularly update this Appendix through public consultations.

• Compliance Challenge for Indian Firms: Many Indian pharmaceutical companies are unaware that API eligibility for duty-free status is not automatic. Each substance must be formally listed in the Pharma Appendix to qualify.

Trade Data & Impact:

• Indian Exports to the U.S. In 2024, India exported over $2.4 billion in bulk drugs (APIs and intermediates) to the U.S.

• Duty-Free vs. Dutiable Exports: Approximately 65-70% of these exports benefited from duty-free status via the Pharma Appendix, while the remaining faced moderate duties.

• Avoidable Duty Costs: Due to the lack of inclusion in the Pharma Appendix, Indian exporters incurred an estimated $50-70 million in avoidable duty costs in 2024 alone. 

Section 301 Tariffs on Chinese Inputs

• Tariff Imposition: The U.S. implemented Section 301, imposing 10-25% tariffs on various Chinese goods, including Active Pharmaceutical Ingredients (APIs), Key Starting Materials (KSMs), reagents, and packaging.

India's Exposure

• API Reliance: India imports 65–70% of its APIs from China (Indian Ministry of Commerce, 2024).

• Material Imports: Several Indian pharmaceutical companies also import Chinese KSMs and semi-processed materials.

Trade Risk & Impact

• Increased Costs: Even for Indian-origin drugs, the tariffs on Chinese content led to higher landed costs.

• Input Cost Increase: Indian companies reported a 5-7% rise in input costs for affected drugs, particularly in antibiotics, oncology, and nutraceuticals.

• Export Impact: The indirect impact of Section 301 input costs on Indian exports was estimated at $2.1-2.3 billion in 2024.

• Supply Chain Uncertainty: Fluctuating exclusion renewals caused instability in supply chain pricing and profit margins.

Section 232 Tariffs on Steel & Aluminum

• Policy: Section 232, implemented in 2018, imposed a 25% tariff on steel and a 10% tariff on aluminum.

• Relevance to Pharma: These tariffs impact the pharmaceutical industry because steel is used in tanks, cleanroom fixtures, reactors, and autoclaves, while aluminum is a key input in foils, blister packs, vials, and secondary packaging.

Trade Data & Impact: 

In 2024, India exported over $750 million in pharmaceutical aluminum packaging to the U.S. (UN COMTRADE). Following the implementation of Section 232, equipment imports and upgrades by Indian firms saw a cost increase of 12-15%. This resulted in Indian CDMOs and contract packagers experiencing a 2-3% rise in capital expenditure (CapEx) and operational costs, ultimately affecting their profit margins and competitiveness when bidding for U.S. contracts.

Withdrawal of India’s GSP Status (2019)Impact of GSP Withdrawal on Indian Pharma

• Policy Change: In 2019, India's Generalized System of Preferences (GSP) status was revoked, impacting approximately 2,000 product lines. 

• Pharma: Specific Exemption: Finished pharmaceuticals remained largely unaffected by this change. This is because they were already exempt from duties under existing WTO Pharma rules.

• Affected Categories: However, the withdrawal of GSP status removed duty-free treatment for certain categories, including packaging materials, diagnostic kits, nutraceuticals, and specific excipients.

Trade Consequences:

• The GSP loss resulted in increased duties on non-core pharma-related exports valued at $250-300 million.

• Increased administrative scrutiny created complexities, particularly for bundled shipments (e.g., kits containing both drug and device components).

Buy American Mandates (EO 13944 & EO 14005 + FAR Rule)

• Policy Framework: Executive Order (EO) 13944 (2020): Mandated the FDA to identify essential medicines and APIs requiring U.S.-based production EO 14005 + FAR Updates (2022): Increased domestic content requirements for government procurement:

• 60% (2022)

• 65% (2024–2028)

• 75% (from 2029)

• Procurement Consequences: U.S. federal contracts (e.g., VA, DoD, HHS) now prioritize drugs manufactured or finished within the U.S. This necessitates Indian pharmaceutical firms with FDA-approved products to establish U.S.-based fill-finish or packaging partnerships to remain competitive.

• Trade Value: Indian companies collectively supply approximately $7 billion worth of generic drugs to the U.S. public healthcare system annually (Source: Congressional Budget Office, 2023).

Impact on Indian Exporters: Indian pharmaceutical exporters face increasing hurdles in securing government tenders. Without restructuring their supply chains or investing in U.S.-based operations, unprepared firms risk losing access to high-volume federal contracts between 2025 and 2029.

5. Present-day scenario of the Trump Tariff on Indian pharma

In 2025, Indian pharmaceutical companies will have largely avoided a significant impact from general U.S. drug tariffs. Nevertheless, trade policies from the Trump era continue to exert influence, particularly concerning input costs. This includes duties on Chinese goods, surcharges on steel and aluminum, and challenges arising from "Buy American" procurement initiatives. Over time, the Trump administration is expected to increase pharmaceutical tariffs to approximately 250%, aiming to bolster domestic growth within the pharmaceutical industry. This evolving landscape underscores that strategic success in the pharmaceutical sector relies as much on stringent regulatory compliance and effective cost management as it does on scientific innovation.

• Base tariffs on finished drugs (Duty-Free Status Maintained)

Roughly 70-75% of India's over $25 billion in pharmaceutical exports are sent to the U.S. and the EU. Most finished dosage forms, including tablets, capsules, and injectables, enter the U.S. duty-free, as stipulated by the WTO Pharmaceutical Agreement and HTS Chapter 30, further supported by the Pharma Appendix. In 2024, Indian generics accounted for 40-50% of all U.S. prescriptions by volume. A widespread tariff on these imports would risk a 15-20% increase in drug prices, which is a key reason the U.S. has kept finished formulations largely tariff-free.

• China-related frictions (Section 301 Duties)

Section 301 tariffs continue to affect APIs and KSMs sourced from China, which are essential for India's drug manufacturing. Approximately 65-70% of India's API imports originate from China (Ministry of Commerce, India, 2024 data). With duties ranging from 10-25%, Indian companies that rely on Chinese intermediates face 5-7% higher input costs. Exclusion lists and delays in renewals introduce further planning uncertainties, particularly for antibiotics, vitamins, and oncology drugs.

• Steel & Aluminum (Section 232 Costs)

Section 232 tariffs (25% on steel, 10% on aluminum), implemented in 2018, continue to impact pharmaceutical operations. Prices for metal-intensive packaging, such as aluminum foils (India exported $750M worth in 2024, UN Comtrade), as well as tanks, racks, and cleanroom equipment, globally increased by 10-15%. For Indian contract manufacturers, this has led to a 2-3% rise in capital expenditure and packaging costs, affecting their competitiveness in U.S. supply contracts.

• Policy heat (Reshoring & Procurement Preference)

While there are currently no direct U.S. import tariffs on Indian finished drugs, the "Buy American" initiative (EO 13944 in 2020, later expanded by EO 14005 and FAR rules) has reshaped federal procurement. By 2029, U.S. government drug contracts will mandate 75% domestic content. Given that Indian suppliers collectively provide $7 billion worth of generics annually to the U.S. federal system (Congressional Budget Office, 2023), this poses a significant procurement challenge. It can be observed that while broad-based drug tariffs remain politically challenging due to potential shortage risks, policy pressure to encourage "domestic sourcing" is increasing.

6. How did the process hit Indian pharma

1. Direct Tariffs: Not a Direct Hit on Finished Drugs

   • Indian finished pharmaceutical products were largely unaffected by direct tariffs.

   • India's WTO Pharmaceutical Agreement membership ensured zero-duty access to the U.S. market for many drugs.

   • Major Trump tariff campaigns (Section 301 on China, Section 232 on steel/aluminum) did not directly target Indian pharma exports.

2. The China Connection: An Indirect Ripple Effect (Section 301)

   • India heavily relies on China for Active Pharmaceutical Ingredients (APIs) and intermediates.

   • Trump's 2018 Section 301 tariffs on China caused a ripple effect.

   • APIs and chemical ingredients became more expensive or faced sourcing delays.

   • Indian firms importing these inputs (directly or via U.S. subsidiaries) experienced higher costs.

   • Result: Increased production costs and supply chain uncertainty for Indian manufacturers exporting to the U.S.

3. Metal Tariffs: A Costly Chain Reaction (Section 232)

   • Tariffs on steel and aluminum had widespread consequences.

   • Impacted pharma equipment, manufacturing infrastructure, and packaging materials.

   • Led to higher capital and operational costs for Indian pharma firms.

   • Affected firms sourced machinery or containers indirectly from the U.S. or through global vendors caught in the tariffs.

4. General Trade Uncertainty: Navigating Uncharted Waters

   • Trump's protectionist and transactional trade policy created a climate of uncertainty.

   • Fueled fears of new tariffs or intense scrutiny on drug imports (under national security or reshoring healthcare supply chains).

   • Resulted in a less predictable trade environment.

   • Prompted Indian firms to strategize, hedge, and diversify supply chains.

7. Regulatory options for Indian pharma

8. Data orientation

1. US reliance on  Indian generic drugs                   

Indian pharmaceutical companies supply nearly half (47%) of all generic prescriptions in the United States, demonstrating America's substantial reliance on India for cost-effective medications. This dependence underscores the critical role India plays in ensuring access to affordable healthcare for millions of Americans, particularly given the widespread use of generic drugs due to their lower cost compared to brand-name alternatives. 

2. Billions in U.S. pharmaceutical imports from India                

In 2024, the United States imported approximately $12-13 billion worth of pharmaceutical products from India. This substantial trade volume reinforces India's crucial role as a premier global provider, supplying not only finished medications but also vital bulk pharmaceutical ingredients.

3. Current tariff landscape

While most finished pharmaceutical products benefit from a 0% tariff under the WTO Pharmaceutical Agreement and specific HTSUS provisions, certain chemical inputs not listed in the Pharma Appendix may incur duties ranging from 0% to 6.5%. This distinction is important because it means that even if a final drug product is tariff-free, the raw materials used to produce it might still be subject to import taxes, potentially increasing overall manufacturing costs.

4. The hidden costs: Steel & Aluminum tariffs

Since 2018, Section 232 tariffs, specifically a 25% tariff on imported steel and a 10% tariff on imported aluminum, have had an effect on the pharmaceutical sector. The exact impact on Indian manufacturers, however, is influenced by several factors. These include Tariff Rate Quota (TRQ) arrangements, which allow a certain amount of imports at a lower tariff, and country-specific exemptions. The primary areas where these tariffs are felt within the Indian pharmaceutical industry are in the cost of pharmaceutical equipment, packaging materials, and the construction of new facilities.

5. Navigating the China-origin content risk

Section 301 tariffs continue to pose a significant hurdle due to their wide-ranging application to active pharmaceutical ingredients (APIs), intermediates, and packaging materials originating from China. Although temporary exclusions occasionally provide relief, they simultaneously introduce unpredictable cost fluctuations and make stable sourcing challenging. This directly impacts Indian companies that rely on Chinese inputs, as they face the risk of indirect tariff exposure, further complicating their existing supply chain operations.

9. Role of Walter Healthcare

Walter Healthcare specializes in assisting Indian pharmaceutical companies navigate the complexities of the U.S. market, even amidst fluctuating trade policies. Our comprehensive services include expert guidance on U.S. regulatory compliance, optimization of supply chain logistics, and practical implementation strategies. This ensures that your products consistently meet all necessary standards, remain cost-effective, and are prepared for securing contracts.

10. Conclusion 

Trump-era trade policies, though not directly imposing tariffs on Indian pharmaceuticals, significantly impacted the industry through indirect costs. These included increased input prices, stricter procurement regulations, and a reorientation of global supply chains. Section 301 tariffs on Chinese APIs, Section 232 duties on steel and aluminum, and Buy American mandates forced Indian pharma to re-evaluate its supply strategy for the U.S. market, its most crucial export destination. However, disruption often breeds opportunity. Success lies with companies that can adapt strategically. This necessitates re-engineering supply chains to lessen reliance on China, aligning with HTSUS and WTO frameworks to maximize duty-free access, and forming U.S.-based partnerships to meet federal procurement requirements.

Walter Healthcare empowers Indian pharmaceutical companies to not only navigate policy volatility but also to transform it into a competitive edge. We provide comprehensive guidance across tariff classification, FDA compliance, sourcing strategy, and government contracting. 

In today's dynamic global landscape, policy shifts are inevitable. Resilience is not merely a reaction; it's a proactive roadmap. With precise intelligence and decisive action, Indian pharmaceutical companies can maintain their indispensable role in the U.S. healthcare ecosystem while solidifying their global leadership. The currents of trade may change, but Indian pharma's forward momentum does not have to.