Double-Edged Sword? How Trump's Pharma Tariff Jolt May Hit US Consumers Hard

US President Donald Trump has once again stirred global markets by announcing a steep 100% tariff on import of branded and patented pharmaceutical drugs, effective Oct. 1.

"Starting October 1st, 2025, we will be imposing a 100% tariff on any branded or patented pharmaceutical product, unless a company is building their pharmaceutical manufacturing plant in America," the US President said in a social media post on Truth Social.

The move is likely to have a major impact on the Indian drugmakers, with Emkay Global's Manish Sonthalia pegging an impact of $10 billion.

Brokerages, too, have pointed out potential impact of US tariffs on Indian companies, especially the likes of Sun Pharma, Biocon and even Wockhardt.

But there is always another side to a story, and on this occassion, the United States could face a significant fallout after announcing the sweeping tariffs.

From Washington's vantage point, a full-fledged tariff on patented and branded products is meant to boost domestic manufacturing in the country, which in turn could help the nation have tighter control in the supply chain.

However, in the near-term, the move risks higher cost and even access frictions. After all, it must be noted that brands account for a minority of prescriptions in the United States but a large majority of the drug spending in the country, whereas generics make up roughly 90% of the prescriptions but only 13% of the spending, as per the U.S. Generic & Biosimilar Medicines Savings Report.

This essentially means that the average American people could bear the brunt of a direct cost inflation. A 100% tariff, in fact, could lead to a massive increase in out-pocket-cost and payer budgets for branded products where no generic substitute exists. This is the case especially in oncology, immunology and other speciality categories.

Now let's talk about generics. On paper, generics appear to have been spared, but until there is a clarification, the ingredients of these generics could be under the blanket of tariffs.

In fact, the US relies heavily on Active Pharmaceutical Ingredients (API) but a fraction of it gets manufactured in the country.

As per data from QualityMatters.org, only 12% of the branded API volume in the United States gets produced in the country while a whopping 43% come from the European Union. The US already charges 15% tariffs on all goods, including pharmaceuticals.

There is also the practical question of how feasible it is for companies to do onshoring, especially when it comes to pharma, as the industry's supply chain is very global in nature.

Therefore, at the end of the day, it is American people who may get severely impacted, with rising out-of-pocket costs, which in turn, might lead to an increase in insurance premium. And to make things worse, various tariffs could lead to supply chain disruptions without actually helping the United States, at least in the near-term.