Trump Administration Shelves Tariffs on Generic Drugs, Easing Pressure on India and U.S. Consumers

Key Points

• Tariffs on Generic Drugs Paused
• On October 8, 2025, the Trump administration shelved plans to impose tariffs on imported generic drugs after internal White House debate.
• The pause came despite a broader pharmaceutical tariff investigation launched in April 2025 targeting all drug imports.
• Branded Drugs Still Tariffed
• On September 25, 2025, President Trump announced a 100% tariff on imported branded and patented drugs, effective October 1, 2025.
• The exemption for generics marks a major policy adjustment.
• Reason for Policy Shift
• The White House Domestic Policy Council warned that tariffs on generics could cause "20-30% price hikes", drug shortages, and minimal job creation due to low-cost production in India.
• A U.S. official told The Washington Post the policy was paused because it would "hurt Americans" without achieving its goals.
• Impact on India
• India supplies ~47% of U.S. generic drugs and 15% of biosimilars, exporting $8.7 billion in pharma to the U.S. in FY24.
• Indian stocks rose on October 9: Aurobindo +3.38%, Dr. Reddy’s +1.78%, Cipla +0.64%, Sun Pharma +0.08%.
• Impact on U.S. Consumers
• Generic drugs account for 90% of U.S. prescriptions and saved $219 billion in 2022, according to AARP.
• The pause prevents price increases of $50-$100 per patient per year and avoids potential shortages for over 100 million Americans.
• No Formal Order Issued
• The pause is a policy decision, not an executive order, and was confirmed quietly to U.S. media outlets including The Washington Post and The Wall Street Journal.
• Next Steps and Risks
• The Commerce Department’s investigation continues and could still affect APIs or complex generics in 2026.
• India's export sector remains alert to future changes; analysts warn of a possible 5-10% export dip if tariffs are later expanded.