The Trump administration is reportedly planning to exclude imported generic drugs from tariffs.
White House spokesman Kush Desai told the Wall Street Journal that "the administration is not actively discussing imposing Section 232 tariffs against generic pharmaceuticals." A Commerce Department representative echoed that the ongoing investigation into pharmaceutical imports under Section 232 of the Trade Expansion Act of 1962 would not result in tariffs on generics.
The decision impacts several major companies, including Teva Pharmaceutical Industries Ltd (NYSE:TEVA), Amneal Pharmaceuticals, Inc (NASDAQ:AMRX), Dr. Reddy’s Laboratories Ltd (NYSE:RDY), Amphastar Pharmaceuticals, Inc (NASDAQ:AMPH), Viatris Inc (NASDAQ:VTRS). It also marks a significant narrowing of the scope of the Commerce Department's pharmaceutical tariff probe, which previously included both branded and generic drug products.
On the campaign trail, Donald Trump pledged to phase in tariffs and import restrictions on all essential medicines to bring production back to the U.S.
Also Read: Trump Administration Review Targets Medical Supply Chain Vulnerabilities
The administration's reversal follows months of disagreement among officials about whether tariffs would help revive domestic manufacturing. Generics account for about 90% of U.S. prescriptions but are mainly produced overseas, particularly in India.
Health policy official Theo Merkel reportedly warned that tariffs on generics could drive up prices and create shortages. He and other advisers argue that steep tariffs won’t work on countries like India where production costs are so low.
The decision brings major relief to Indian drugmakers, which supply nearly half of all generic prescriptions in the U.S. India is the largest source of generics for the American market, accounting for 47% of prescriptions filled, per IQVIA data.
Others within the Commerce Department have pushed for including generics in future trade restrictions. They argue that overreliance on foreign suppliers poses national security risks. A combination of tariffs and government incentives could also prevent the kind of supply disruptions seen during the Covid-19 pandemic.
Despite those arguments, Desai said there is "no daylight or disagreement" between the White House and Commerce Department.
Meanwhile, the administration is considering alternative ways to reshore manufacturing. Whether Trump takes executive action to offer federal grants or loans to U.S. producers of generics remains to be seen.
Funding could be drawn from tariff-related agreements with foreign governments, such as Japan, observers note. So far, those funds have not yet been allocated.
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