The United States is planning to impose higher tariffs on pharmaceutical imports, with China likely to be the first country affected, according to Commerce Secretary Howard Lutnick.

In an interview on Sunday, Lutnick emphasized the strategic need for domestic production of essential goods. “We can’t be relying on China for fundamental things that we need such as our medicines and our semiconductors which need to be built in America,” he said.

His remarks follow President Donald Trump’s recent declaration at the National Republican Congressional Committee that a “major” tariff on imported drugs is on the horizon.

Lutnick clarified that these tariffs are not negotiable exemptions. “These are matters of national security that need to be made in America,” he added.

Until now, pharmaceuticals have largely been exempt from US tariffs due to the country’s heavy dependence on low-cost generic drugs from countries like China and India. These generics play a critical role in making healthcare affordable for many Americans.

With the US-China trade war ongoing, Chinese pharmaceutical exports are expected to be the first target. This could, at least temporarily, shift more of the demand toward Indian generics.

India currently supplies over 45% of the generic drugs consumed in the US. Major Indian pharma companies—including Dr Reddy’s, Sun Pharma, Aurobindo Pharma, Zydus Lifesciences, and Gland Pharma—derive a significant portion of their revenues from the American market.

According to the Pharmaceuticals Export Promotion Council of India, India exported $8.7 billion worth of pharmaceutical products to the US in FY24, out of its total exports of $27.9 billion.

Analysts warn that increased US tariffs could lead to higher drug prices and shortages of key medications such as antibiotics and chronic disease treatments.

Meanwhile, India is in talks with the US to finalize a bilateral trade agreement. Industry sources hope that India’s role as a key supplier of affordable medicines will be considered during these negotiations.