The US has announced a 100% tariff on imported generic drugs starting in August 2028, increasing to 200% in 2029, aiming to drive manufacturing back onshore. Barclays believes the two-year buffer period limits short-term market impact, and policy adjustments remain possible. Among emerging Asian economies, India's generic drug exports face the highest risk, but the macroeconomic impact is still manageable.
Trump has announced plans to impose hefty tariffs on imported generic drugs, again pressuring the global pharmaceutical supply chain.
According to CCTV News, on July 21 local time, US President Trump stated on social media that all generic drugs imported into the US will continue to enjoy zero tariffs for the next two years starting August 1, 2026. After the two-year period expires, these products will be subject to a 100% tariff for one year; subsequently, the tariff will be raised further to 200%.
Trump stated that the purpose of this policy is to drive the reshoring of generic drug production to the US. Companies that fail to establish production facilities and related equipment in the US within the specified timeframe will face tariff penalties. Current policies for patented drugs, branded drugs, and innovative drugs, due to their satisfactory implementation, will remain unchanged.
A Barclays research report released on July 22 points out that as the new tariffs include a two-year transition period, the market is unlikely to reprice the related risks in the short term before their official implementation in August 2028, with investors more likely to adopt a wait-and-see approach.
Among emerging Asian markets, India faces the relatively largest risk exposure due to its high proportion of generic drug exports, but the overall impact remains relatively manageable; meanwhile, significant policy uncertainty remains regarding whether the new tariffs align with the previously established US-India bilateral framework.
Two-Year Buffer Period Mitigates Short-Term Market Shock
Barclays believes the most notable feature of this tariff policy is its slow implementation pace, thus limiting its expected short-term impact on capital markets. The report notes there is still a two-year window before official implementation, and future policy could be further delayed or adjusted. This assessment is supported by Trump's previous drug tariff policies.
In late September 2025, Trump announced a 100% tariff on branded (patented) drugs and required companies to build factories in the US, originally scheduled to take effect in October 2025 but subsequently postponed. The policy was finally implemented on April 2, 2026, with lower rates applied to economies including the EU, Japan, South Korea, Switzerland, Liechtenstein, and the UK, while large enterprises and SMEs were granted 120-day and 180-day transition periods respectively.
Barclays believes this case demonstrates that US drug tariff policies often have a significant time lag between announcement and implementation, so the market may not immediately trade on distant risks.
India Faces Highest Generic Drug Risk
Looking at emerging Asia, Barclays estimates that Singapore has the highest Value Added (VA) exposure to US drug exports, including both drugs directly exported to the US and indirect exports formed by supplying intermediate products to other economies.
However, Singapore's drug exports to the US consist mainly of branded and patented drugs, which have been subject to the previous drug tariffs since April this year, so the impact of the newly added generic drug tariffs is relatively limited.
In contrast, India's risk is more targeted. Although the Indian economy is primarily driven by domestic demand, with relatively lower reliance on external demand, pharmaceuticals are a significant component of its exports to the US, and India holds a leading position in the global generic drug market, with generic drug exports accounting for a significantly higher share of the industry compared to Singapore. Therefore, Trump's latest tariff hike on generic drugs will have a more direct impact on India's pharmaceutical industry.
However, Barclays also emphasizes that from a macroeconomic perspective, India's overall generic drug export volume to the US is still insufficient to cause a significant shock to economic growth, so the overall risk remains manageable.
