On September 26, 2025, US President Donald Trump announced a sweeping new set of tariffs targeting branded and patented pharmaceutical imports, sending shockwaves through the global pharmaceutical industry and rattling trade partners from Australia and India to the European Union. The move, which takes effect October 1, 2025, will see a 100 percent tariff imposed on any branded or patented pharmaceutical product entering the US—unless the manufacturer has already begun building a plant on American soil. The announcement, made via Trump’s TruthSocial platform, marks a dramatic escalation of his administration’s protectionist trade agenda and leaves exporters, investors, and policymakers scrambling to assess the fallout.
According to The Sydney Morning Herald, the new US tariffs represent a direct threat to Australia’s $2.6 billion pharmaceutical export industry, a sector that has carved out a reputation for innovation and quality. Australian biotech giant CSL, which sources plasma in the US, processes it in Australia, and then sells it back to the US, finds itself squarely in the crosshairs of the new policy. The company’s shares tumbled by 1.9 percent to $194.23 following the announcement, after initially shedding billions in market value amid investor jitters. CSL expressed confidence in securing a tariff exemption, citing Trump’s comments about waivers for companies investing in US manufacturing. Still, uncertainty looms large.
Jenny Gordon, a fellow at the Lowy Institute, warned in The Sydney Morning Herald that the longer-term implications could be even more damaging. "A bigger risk is more long-term in that it's the decline in investment in biotech and the mRNA vaccines, the downplaying of vaccines, which will reduce demand," she said, adding, "It reduces supply of the latest technology and to the extent to which our researchers are working with (US) researchers, they won't be developing the same kinds of things coming down the pipeline." Gordon pointed out that pharmaceuticals had been a rare niche where Australia excelled globally, and the new tariffs could erode hard-won gains.
Stephen Duckett, a professor at the University of Melbourne’s School of Population and Global Health, echoed these concerns, telling The Sydney Morning Herald that the US move amounted to “President Trump ripping up the Australia-US free trade agreement.” He highlighted that the tariffs would hit companies like CSL particularly hard due to their trans-Pacific business model. Australia’s Health Minister Mark Butler said the government was still working to understand the full implications for local exporters, emphasizing, "We've been making the case, since it first became clear that the US was going to take some action in this area, about the benefits of continued free trade in pharmaceuticals between our countries."
Australia is not alone in facing the brunt of the new tariffs. As reported by The Indian Express, India’s pharmaceutical sector—much of it focused on generic drugs—may escape the worst of the impact, at least for now. India is the world’s largest supplier of generic medicines to the US, accounting for nearly 40 percent of its pharma exports to America, valued at $9.8 billion in 2024-25. Generic (off-patent) drugs remain exempt from the tariffs, but the fate of so-called “branded generics” remains murky. The Delhi-based Global Trade Research Initiative (GTRI) noted, “The grey zone is ‘branded generics’ – generic molecules sold under brand names like Crocin could face tariffs if treated as ‘branded imports’. Many Indian firms sell it to the US.”
Indian pharmaceutical giants such as Zydus Lifesciences, Dr. Reddy’s Laboratories, Lupin, Sun Pharma, and Cipla dominate exports to the US. HSBC analysts pointed out that Sun Pharma is the only major Indian company with significant US sales in patented products, reporting $1.2 billion in global sales from patented drugs, with 85-90 percent coming from the US. For now, most Indian drugmakers appear shielded, but as GTRI cautioned, “Policymakers and exporters will be watching closely for clarifications from Washington in the coming days.”
The timing of the US move is particularly fraught for India. According to a September 27, 2025 report by Crisil Intelligence, the new tariffs on Indian goods—including pharmaceuticals, textiles, and marine products—pose a significant risk to the country’s economic growth. The report noted that while domestic consumption and a series of rate cuts by the Reserve Bank of India are expected to support growth, the tariffs will negatively impact both exports and investment. India’s GDP grew to 7.8 percent in the first quarter of fiscal 2025-26, but nominal GDP growth slowed, and the country’s policymakers are now bracing for further headwinds.
Meanwhile, European pharmaceutical companies are expected to bear the immediate brunt of the US tariffs. As Euractiv reported, the EU and US had only recently agreed to a 15 percent flat tariff on pharmaceuticals (with generics exempt) after a lengthy negotiation linked to Washington’s Section 232 drug import investigation. Trump’s new 100 percent tariff, however, is a dramatic escalation—especially since he had previously threatened tariffs as high as 250 percent on EU pharmaceuticals, giving companies around a year to relocate manufacturing. Notably, some European drugmakers, including Roche, Novartis, and AstraZeneca, have already announced plans to build or expand manufacturing facilities in the US, hoping to secure exemptions. Trump clarified that companies would be exempt from the tariffs if construction on a US plant had started, defining “building” as “breaking ground” or “under construction.”
The Brussels-based European Federation of Pharmaceutical Industries and Associations (EFPIA) stressed the importance of maintaining open trade channels and continuing transatlantic dialogue. EFPIA director general Nathalie Moll urged, “They should now continue discussions on how the EU can improve its support towards the cost of global research and development in a way which doesn’t harm patients in the EU and the US.”
Trump’s justification for the tariffs rests on Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs on the grounds of national security. The US Department of Commerce has launched a raft of new investigations under this provision, targeting not only pharmaceuticals but also steel, aluminium, kitchen cabinets, bathroom vanities, heavy trucks, semiconductors, timber, and more. While the Section 232 tariffs are narrower in scope than those possible under the International Emergency Economic Powers Act (IEEPA), they are considered more legally robust, as the US Supreme Court has generally declined to challenge national security-based trade measures.
The global pharmaceutical market is now facing a period of intense uncertainty. For Australia, the US, and Europe, the new tariffs threaten to upend established trade flows, disrupt research collaboration, and force companies to reconsider where they invest and manufacture. For India and other generic drug exporters, the immediate impact may be less severe, but the risk of future escalation or shifting definitions remains.
With the October 1 deadline looming and legal challenges to Trump’s tariff powers potentially on the horizon, policymakers, companies, and patients alike are left anxiously awaiting the next turn in this high-stakes trade drama. The ripple effects of these tariffs, both immediate and long-term, will be closely watched by stakeholders across the globe.