What Trump's New Generic Drug Tariffs Could Mean for the Medicines Millions Rely On

President Trump has announced a new tariff plan for imported generic drugs designed to bring production to the United States, which would hopefully lower prices and eliminate some money stress for consumers. However, the generic drug industry is pushing back and pointing out potential issues with the plan that might affect production.

If you or a loved one depend on an imported generic drug, here's what to know about how the plan is supposed to work and what to expect.

The timeline of Trump's generic drug tariff plan

In an effort to shift generic drug production to the United States, Trump has announced a policy that would implement tariffs on imported generic drugs. According to Trump, the tariffs wouldn't go into effect for two years, giving manufacturers the opportunity to transition manufacturing to the U.S.

After two years, tariffs of 100% would be placed on imported generic drugs for one year. At the end of the year, those tariffs would then increase to 200%. The Trump administration reports that the tariffs should help bring pharmaceutical production back to the U.S.

At this time, since tariffs aren't yet implemented, nothing should change at the pharmacy.

Why tariffs for imported generic drugs matter

Generic drugs account for about 90% of U.S. prescriptions, and India supplies nearly half of all of the generic drugs taken in the U.S. These generic medications save U.S. consumers billions in health care costs, and in 2022, the savings from Indian generic drugs alone amounted to $219 billion.

Since generic drug prices are so low, manufacturers of the medications often compete against each other. That fierce competition leaves little room for the manufacturers to absorb any price increases. If tariffs drive up production costs, then drug prices must increase, margins must decrease, or manufacturers might choose not to produce certain products. It's possible that shortages on these medications might occur if a transition to U.S. production lags.

Additionally, building a drug manufacturing system in the U.S. takes at least four to five years, meaning there simply might not be time for manufacturers to transition and implement manufacturing onshore.

How generic drug tariffs might impact the health care system

These tariffs on imported generic drugs could potentially impact the entire health care system. If manufacturers must substantially increase the price of generic drugs because of the cost of bringing production to the U.S., those higher costs might eventually work their way through the greater health care system. Since 90% of generic drugs are imported to the U.S., the tariffs would effectively impact nearly all manufacturers, and the effect of such tariffs could be widespread.

President Trump campaigned on increasing affordability, including reducing drug costs. If the tariffs actually increase the cost of generic drugs, that shift might undermine his campaigning message.

The patients who are most at risk because of tariffs on generic drugs

The potential consequences of tariffs on generic drugs put certain patients at risk. An IQVIA study revealed that more than 60% of hypertension and mental health prescriptions in the U.S. are filled with Indian-made drugs, indicating the U.S. is highly dependent on imported generic medications for certain health conditions. Consumers who take medications for such health conditions might feel the impacts of these tariffs the most strongly.

If the tariffs drive up the price of generic medications, then U.S. consumers who are already on tight budgets might be strongly affected. It's possible that some consumers might not be able to afford their medications if prices increase, and they might be forced to go without them. Americans who are enrolled in high-deductible plans may be significantly impacted, as could those who are on Medicare or Medicaid plans.

How Chinese tariffs are affecting U.S. drug production

This isn't the first time that Trump's tariffs have affected medication prices in the U.S. The majority of the raw materials required to manufacture prescription drugs in the U.S. are located outside of the country, and China fulfills about 40% of the global supply of such raw materials. Since Trump took office, tariffs on Chinese imports have increased 20%, driving up the cost of the raw materials that U.S. drugmakers need.

Bottom line

At this time, Trump's tariff plan is an announced policy and is not a settled law. There's already been pushback among manufacturers and industry representatives, and how the tariffs affect manufacturing and prices partially depends on how the administration implements the policy. For example, if the administration only requires manufacturers to demonstrate that efforts are underway to manufacture drugs in the U.S., more manufacturers may be able to meet the two-year timeline and avoid the tariffs.

There's no need to take action now, since the potential effects of the policy are still two years away. As the tariff deadline nears, it may be a good idea to ask your pharmacist about any potential supply disruptions of medications that you take. If price increases are anticipated, give some thought to how you might cope with increasing bills so you're prepared for the cost.

You May Also Like

$200 Bonus + Up to 5% Cash Back

Earn a $200 bonus after spending $500 on purchases in your first 3 months from account opening. Member FDIC

SPONSORED

7 Ways To Get Money Without Getting A Second Job

By FinanceBuzz Editors

How To Save Money on Car Insurance: 12 Ways to Lower Rates

By Elyssa Kirkham

10 Things Seniors Born Between 1941-1969 Could Take Advantage Of

By FinanceBuzz Editors

19 Dumbest Things Smart People Waste Money On

By Team FBZ

7 Moves If You Want to Stop Living Paycheck to Paycheck

By FinanceBuzz Editors

7 Clever Ways to Crush Your Debt

By FinanceBuzz Editors

Up To 5% Cash Back

Discover it^® Cash Back

Benefits Card Details

• $0 annual fee
• Intro APR on purchases and balance transfers
• Apply Now

• Get a 0% intro APR for 15 months on purchases and balance transfers; balance transfer fee applies. Then 17.49% to 26.49% Standard Variable Purchase APR applies, based on credit worthiness
• INTRO OFFER: Unlimited Cashback Match for all new cardmembers. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300
• Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases
• Redeem cash back for any amount. No annual fee
• Terms and conditions apply

4.7

FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.

Apply Now

on Issuer's secure website

Rates and fees

Read Card Review

Intro Offer

INTRO OFFER: Unlimited Cashback Match for all new cardmembers. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300

Annual Fee

$0

+ -

Why we like it

• The Discover it^® Cash Back is ideal for anyone who loves flexible rewards options.

• Cardholders can redeem their cash back for any amount.

• Earn 5% cash back on rotating bonus categories up to the quarterly maximum when you activate, along with 1% cash back on all purchases. Categories may include places like gas stations, grocery stores, restaurants, and more.

• Apply Now

---

Subscribe Today

Learn how to make an extra $200

Get vetted side hustles and proven ways to earn extra cash sent to your inbox.

or

Subscribe Now →

By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms