US plans to hike tariffs on pharma products, China first in firing line

"We can't be relying on China for fundamental things that we need such as our medicines and our semiconductors which need to be built in America," Howard Lutnick said.

"We can't be beholden and rely upon foreign countries for fundamental things that we need," he said.

The statement comes close on the heels of President Donald Trump's declaration at the National Republican Congressional Committee that the U.S. would soon impose a "major" tariff on imported drugs.

"So this is not like a permanent sort of exemption. He's just clarifying that these are not available to be negotiated away by countries. These are things that are national security that we need to be made in America," Lutnick said.

Pharmaceuticals have until now been kept out of the USA's broader tariff rates as the country is dependent on cheap generic drugs available from countries like China and India to run their healthcare system. This is a great help as US multinationals sell the same medicines at very high prices that are often out of reach for common consumers.

Since China is locked in a trade war with the USA, drug exports from the communist country are clearly the first target. This would only increase the dependence on Indian generic drugs for the short term, according to industry sources.

More than 45 per cent of the generic drugs used in the US are made in India. India pharma giants such as Dr Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma earn up to half of their revenues from American consumers.

India's pharmaceutical industry is closely linked to the United States. In FY24, the U.S. accounted for $8.7 billion of India's total $27.9 billion pharma exports, according to the Pharmaceuticals Export Promotion Council of India.

The US relies heavily dependent on low-cost Indian generics and hiking duties would push up prices and trigger shortages of essential drugs, especially antibiotics and common treatments.

Besides, India is engaged in talks with the US for a bilateral trade agreement. It is expected that the fact that essential generic medicines are available at cheap prices for American consumers will be kept in mind during the negotiations.