India's Pharma sector Receives Relief from Trump's Reciprocal Tariff

U.S. President Donald Trump implemented new reciprocal tariffs but excluded pharmaceuticals, energy, and specific minerals to provide relief to India’s generic drug industry.

The White House's factsheet stated, "Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States."

Trump declare a 26% tariff against India while pointing to its 52% tariff on U.S. goods alongside currency manipulation and non-tariff obstacles as reasons. Starting April 9, India faces steep tariffs alongside Vietnam (46%) and the Philippines (17%), while a 10% global tariff affects all other countries beginning April 5.

"India imposes their own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that U.S. exports would increase by at least $5.3 billion annually", mentioned in the factsheet.

The White House referenced India's steep tariff rates which include 70% on passenger vehicles, 10-20% on networking equipment, 80% on rice in the husk and 50% on apples. Although the U. S. India's average tariff rate stands at 17% while the 26% tariff serves to address the trade disparity between the two countries, however, India’s Pharmaceutical industry is an exception.

The US Trade Representative said, "To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed…Regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance hurdles and costs, currency manipulation and undervaluation all serve to deter American goods and keep trade balances distorted."