Trump escalates trade war: 100% tariff on patented drugs, major blow to global supply chains

In a sweeping escalation of trade measures, US President Donald Trump announced on September 26 that Washington will impose a 100% tariff on branded or patented pharmaceutical products starting October 1, unless companies have begun construction of manufacturing plants in the United States. The move comes alongside tariffs of 50% on kitchen cabinets and bathroom vanities, 30% on upholstered furniture, and 25% on heavy trucks, all justified under national security provisions of Section 232 of the Trade Expansion Act of 1962.

Trump framed the tariffs as a defense against the “large-scale flooding” of foreign goods into the US, warning that the measures aim to protect American manufacturing and national security. He clarified on TruthSocial: “There will be no tariff on these Pharmaceutical Products if construction has started.”

The wave of new tariffs comes as Trump’s authority under the International Emergency Economic Powers Act (IEEPA) faces potential curtailment by the US Supreme Court next month. Should the court rule against the administration, reciprocal tariffs on other countries may need to be removed — adding a layer of uncertainty to global trade.

Implications for India

For India, the immediate impact on pharmaceuticals could be limited. The country is the world’s largest producer of generics, supplying nearly 20% of global demand. However, the tariffs may hit Indian companies moving up the value chain into patented and novel drugs, potentially affecting incentives under India’s Production-Linked Incentive (PLI) Scheme for pharmaceuticals.

The PLI program, approved by the Union Cabinet in 2021 with an outlay of ₹15,000 crore, aims to promote high-value drugs, including biopharmaceuticals, complex generics, anti-cancer, and autoimmune drugs, running through FY 2027-28. Tariffs on patented products could undercut these efforts, raising costs and challenging export ambitions.

Section 232: A growing threat

The US has increasingly leveraged Section 232 to target specific products, from steel and aluminium to timber, semiconductors, commercial aircraft, and critical minerals. While these tariffs are narrower than those under IEEPA, Section 232 carries stronger legal protection due to the “national security” rationale, which the Supreme Court has historically upheld.

India, too, has invoked national security to restrict imports, making the move a contentious issue in global trade forums, including the WTO. With the potential expansion of the Section 232 product list, Indian exporters face heightened uncertainty, particularly in labor-intensive sectors such as textiles, footwear, and marine products, which are already under pressure from existing 50% US tariffs.

As the US tightens the screws on imports under the banner of national security, Indian businesses are bracing for a challenging landscape — one that could reshape trade flows, disrupt supply chains, and redefine strategic manufacturing decisions in the coming years.