Trump Makes a U-Turn, Warns “Never Seen Before” Tariffs on Pharma
Trump has been talking about imposition of tariffs ever since he took charge of the office. However, the decision to keep the sector away from reciprocal tariffs came as a breather for the pharma industry, though many were sceptical about his plans.
Chennai: Making a somersault in his trade policy, US President Donald Trump on Friday announced that the pharmaceutical sector will soon have tariffs of “never seen before levels”, after exempting the sector from reciprocal tariffs on April 2.
On April 2, while announcing the reciprocal tariffs, Trump had exempted pharmaceuticals along with semiconductors and certain minerals from the list. However, on Friday he made a u-turn and said that the sector will soon have tariffs.
While speaking to reporters on Air Force One, Trump said, “Pharma tariffs are going to come in at levels you haven’t really seen before. We are looking at pharmaceuticals as a separate category. We will be announcing that sometime in the near-future and not too distant future. It’s under review right now.”
The US is a major consumer of India’s generic pharmaceuticals, which are available at almost one-tenth of the rates of the patented drugs. This helps the US government save billions of dollars on its healthcare spends, apart from making drugs affordable for the consumers.
As far as India is concerned, pharmaceuticals is a major export category with shipments worth $27 billion and of this 30 per cent or around $8.2 billion valued drugs are consumed by the US. As of now, India imposes average 10 per cent duty on US drugs, while Indian drugs are shipped at zero per cent duty.
Trump has been talking about imposition of tariffs ever since he took charge of the office. However, the decision to keep the sector away from reciprocal tariffs came as a breather for the pharma industry, though many were sceptical about his plans.
“Though the reciprocal tariffs were positive for pharma, we were concerned about future inconsistencies in his policies,” said Ravi Uday Bhaskar, former director general of the Pharmaceuticals Export Promotion Council of India (Pharmexcil).
According to him, the Indian government should recognise its strength of providing generics to the world and making healthcare affordable and stand its ground.
“Pharmaceutical demand is not going to come down with the tariffs. American consumers may buy lesser clothes or jewellery, but they cannot stop buying medicines. When the healthcare expenses will go up, Trump will come back negotiating with us,” he said.
Further, the government cannot push pharma companies to set up manufacturing facilities in the country in three to four years and start supplying drugs to its people.
“Moreover, pharma companies cannot produce generic drugs in the US at such affordable levels as we make. The cost will at least be 30 per cent more. Hence, we should recognise our strength and negotiate on our own terms,” he said.
Meantime, the pharma sector should look at broad basing its export market to reduce its dependency on the US market, he added.
