In a fresh expansion of the tariff net, US President Donald Trump on Friday said Washington will be imposing a 100 per cent tariff on branded or patented pharmaceutical products, a 50 per cent tariff on all kitchen cabinets, bathroom vanities and associated products, and a 25 per cent tariff on heavy trucks from October 1. This comes after the US launched a range of investigations under Section 232 of the Trade Expansion Act of 1962, which gives Trump the power to raise tariffs citing “national security”.
The wave of fresh tariffs under Section 232 comes at a time when Trump’s tariff powers under the International Emergency Economic Powers Act (IEEPA) could possibly be curtailed next month if an adverse ruling comes in from the US Supreme Court, forcing the administration in DC to remove reciprocal tariffs on countries. India is facing a 50 per cent tariff that is threatening jobs in labour-intensive sectors such as textiles, footwear and marine products.
“Starting October 1st, 2025, we will be imposing a 100 per cent Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. ‘IS BUILDING’ will be defined as ‘breaking ground’ and/or ‘under construction.’ There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started,” Trump said in his post on TruthSocial.
Simultaneously, he announced a 50 per cent tariff on all kitchen cabinets, bathroom vanities and associated products, a 30 per cent tariff on upholstered furniture, and a 25 per cent tariff on all heavy trucks, citing national security issues. “The reason for this is the large-scale “FLOODING” of these products into the United States by other outside Countries. It is a very unfair practice, but we must protect, for National Security and other reasons, our Manufacturing process,” Trump said.
Limited impact on India due to pharma tariffs
The immediate impact on India from the pharma tariffs could be limited, as India is the world’s largest producer of generic drugs and supplies nearly 20 per cent of global demand. However, top Indian pharma companies have been attempting to move up the value chain with an increasing focus on patents and novel drugs.
Trump’s move could also affect government incentives under the Production-Linked Incentive (PLI) schemes that are focusing on developing products under three categories. According to an official statement, the first category covers biopharmaceuticals, complex generic drugs, “patented drugs or those nearing patent expiry”, gene therapy drugs, orphan drugs and complex excipients.
The PLI Scheme for Pharmaceuticals was approved by the Union Cabinet in 2021, with a financial outlay of Rs 15,000 crore and a production tenure running from FY 2022-23 to FY 2027-28. “Under this scheme, high-value pharmaceutical products such as patented/off-patented drugs, biopharmaceuticals, complex generics, anti-cancer drugs and autoimmune drugs, among others, are manufactured,” the government said in April this year.
Expanding use of Section 232 a worry for India
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The US has been increasingly using Section 232 to impose tariffs on specific products such as steel and aluminium. Among the new investigations launched by the US were probes into pharma and pharma ingredients.
After imposing 50 per cent tariffs on steel, aluminium and copper using Section 232, the US Department of Commerce opened fresh investigations into timber and lumber, semiconductors and semiconductor manufacturing equipment, pharma and pharma ingredients, trucks, processed critical minerals, commercial aircraft and jet engines, polysilicon and its derivatives, wind turbines, and unmanned aircraft systems along with their parts and components. The product list could expand further going forward.
While tariffs under Section 232 are far less sweeping than reciprocal tariffs that Trump managed under IEEPA, the former provides much stronger legal cover, as the US Supreme Court has on multiple occasions refused to entertain challenges due to the “national security” element in the statute. India has also invoked “national security” to restrict the entry of goods in the past, and at the WTO, what measures fall under national security has been a hotly contested issue due to its broad scope.
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