President Donald Trump imposed a giant 100% tax on imported branded and patented medicines from October 1, but some countries and firms will receive exemptions that will mitigate the effect. Trump revealed the new levies on Thursday in his Truth Social account, but firms constructing US factory sites and nations with the existing trade agreements will escape the full tariff. Recent news reports reveal that the European Union and Japan will pay significantly lesser taxes under their earlier signed trade deals.
White House confirmed Friday that Japanese and EU exports of medicine will be limited to 15% taxes from agreements they had struck previously. EU trade commissioner Olof Gill stated that this 15 percent tax cap is an assurance that there will be no such higher taxes for European businesses. Japan’s pharmaceuticals will be subjected to rates based in their bilateral agreement, according to which US tax levied on Japanese medicines should be equivalent to the tax rates levied on the EU.
Britain is Confronted with Full Tax Whereas India’s Generic Medicines Shielded
But Britain will be hit with the full 100% tax after sources confirmed London would not be shielded despite securing a trade deal with Washington. Although Britain was the first country to sign a trade deal with Trump, medicine tax levels are still to be negotiated, putting UK businesses in jeopardy. Britain exported more than $6 billion worth of medicine products to the US in 2024. The full tax would badly damage British drugmakers that rely on the American market.
India’s pharmaceutical industry, which exported $9.8 billion to the US in fiscal 2025, seems to be insulated from short-term effects. The tax applies to branded or patented items alone, while India primarily exports generic drugs that account for about 90% of US prescriptions. Federation of Indian Export Organisations’ Ajay Sahai said as the 100% tax aims at branded and patented medicines, Indian generic exports would not be directly hit in the short term.
Companies Building US Plants Get Tax Breaks
Trump’s policy allows corporations to bypass the tax if they have initiated construction or broken ground on US factory construction. The exception has already triggered billions of medicine investments, with big drugmakers such as Eli Lilly announcing $27 billion in US plant development and Johnson & Johnson committing $55 billion to domestic production. Swiss firms Roche and Novartis cited their current US construction projects in reaction to the announcement.
Even with generics protection, Indian medicine shares declined 2% Friday as markets feared the widening of taxes to complicated generics and specialty pharmaceuticals. Firms such as Sun Pharmaceuticals, which generates significant revenues from specialty branded drugs in the US, are at risk. The taxes are Trump’s newest attempt to return the manufacturing of medicine to America and minimize foreign supply chains dependency.
FAQs
1. What is the new foreign medicines tax rate?
Trump slapped a 100% tax on branded and patented drug imports from October 1.
2. Which nations receive reduced tax rates?
The EU and Japan will receive only 15% taxes under their existing trade pacts.
3. Do all foreign drug firms have to pay the complete tax?
No, companies constructing US factories and those in some countries that have trade agreements are heavily exempted.
4. How do Indian drug firms get impacted?
Indian firms heavily get protected because they do not sell branded or patented drugs, which are mostly what is targeted under this tax.
Stay updated with the latest news, innovations, and economic insights at Inspirepreneur Magazine.
