Tariffs on imported pharma could go up to 250%, U.S. President Trump says

/ 2 min read
Summary

The impact of tariffs could erode profits of Indian pharmaceutical firms and also slam the brakes on R&D. India is also under Trump’s scanner, who has warned that reciprocal tariffs will be raised substantially.

U.S. President Donald Trump
U.S. President Donald Trump | Credits: Getty Images

U.S. President Donald Trump said that tariffs on imported pharmaceuticals can be as much as 250 percent after initially levying a “small tariff” and then spiking it to 150 percent to give a fillip to domestic production of pharmaceuticals.

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Trump, who was speaking to CNBC in an interview, did not specify what the initial tariffs on pharmaceuticals would be. The U.S. has been undertaking a national security review of the pharmaceutical sector. It is not known when the results of the review will be announced, but the industry has been taking contingency measures, preempting sector-specific tariffs. More recently, AstraZeneca said that it has earmarked an investment of $50 billion to expand manufacturing and research facilities in the U.S. by 2030.

According to data compiled by Nomura, pharmaceuticals make up about 37% of India’s sectoral exports, with 12% of the exports going to the U.S. While pharmaceuticals and electronics are exempted from reciprocal tariffs under the U.S. Section 232 trade investigations, any sectoral tariffs levied on pharmaceuticals will be passed on to end-consumers, which, in turn, would affect the export volumes.

Sanjaya Mariwala, the executive chairman and managing director of OmniActive Health Technologies, said that pharmaceuticals and electronics would take the biggest hit with the imposition of tariffs and a fine for importing oil from Russia.

Beyond the monetary implications, the tariffs would interrupt smooth trade flow, inflate U.S. drug costs, stall treatments, and could even put greater pressure on American healthcare budgets. “Back home, the profits for Indian pharmaceutical companies may decline, and R&D may stagnate, slowing down innovation and stalling new drug clearances,” he said.

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Trump also told CNBC that it will impose substantially higher tariffs on India in the next 24 hours, a day after he launched a fresh salvo at India over the import of oil from Russia. His comments came close on the heels of the Indian government issuing a strong rejoinder against Trump’s threats, repudiating that the U.S. is unfairly targeting India when imports by the U.S. and the EU were much higher than India’s.

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