Trump announces phased tariffs on generic drugs: 100% in 2028, 200% in 2029

U.S. President Donald Trump signs an executive order on researching the effects of psychedelic drugs in medical treatment for veterans, on Saturday, April 18, 2026 in the Oval Office at the White House in Washington, D.C. The Washington Post | The Washington Post | Getty Images

President Donald Trump announced that generic drugs imported into the U.S. will face zero tariffs for two years starting August 1, before a 100% levy takes effect in August 2028 and rises to 200% a year later.

Key Details

• Grace period: Zero tariffs on generic drug imports from August 1, 2026, to August 1, 2028
• First escalation: 100% tariff effective August 2028
• Second escalation: 200% tariff effective August 2029

Policy Rationale

The phased schedule is intended to push generic drugmakers to move production onshore, Trump said in a social media post Tuesday. He described the escalation as "a penalty" for companies that do not build plants and facilities in the U.S. within the grace period.

Impact on Branded and Patented Drugs

Tariffs on patented and branded drugs will remain unchanged. The president imposed a 100% levy on patented pharmaceutical products and ingredients under Section 232 on April 2, while exempting generic drugs, biosimilars, and related ingredients.

• Larger drugmakers: Given 120 days before the 100% tariff rate takes effect
• Smaller drugmakers (relying on contract manufacturers): Given 180 days before that rate applies

Industry Agreements

More than a dozen major drugmakers, including Eli Lilly, Pfizer, and Novo Nordisk, have struck deals with Trump to lower the prices of new and existing medicines. These agreements are part of the president's "most favored nation" policy, which ties U.S. drug prices to cheaper ones abroad and exempts the companies from tariffs for three years.

Trump has used tariff threats and his most-favored-nation pricing policy to press drugmakers into charging Americans no more than patients in other high-income countries.

Implications for Global Supply Chains

• India: The stakes are high, as Indian pharmaceutical companies supply nearly 50% of all generic medicines consumed in America. The U.S. accounts for about one-third of India's pharma exports, mostly cheaper versions of popular drugs.
• China: Chinese firms dominate the upstream supply of active pharmaceutical ingredients, such as amoxicillin and heparin.

Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.