Trump plans high generic-drug tariffs in 2028 to spur U.S. production

Key Points:

• President Donald Trump announced that generic drugs imported into the U.S. will have zero tariffs for two years starting August 1, before tariffs escalate to 100% in August 2028 and 200% a year later.
• The phased tariff increase aims to incentivize generic drugmakers to relocate production to the U.S., with the tariff hike described as a penalty for companies that fail to build domestic facilities within the grace period.
• Tariffs on patented and branded drugs remain unchanged, with a 100% levy imposed on these products since April 2, while generic drugs and biosimilars were initially exempted.
• Major pharmaceutical companies like Eli Lilly, Pfizer, and Novo Nordisk have agreed to lower drug prices under Trump’s "most favored nation" policy, which links U.S. drug prices to lower prices abroad and exempts them from tariffs for three years.
• Trump’s approach combines tariff threats and pricing policies to pressure drugmakers into aligning U.S. drug prices with those in other high-income countries.