U.S. announces steep new tariffs on drugs, trucks and furniture: what it means for the world and for India

With effect from October 1, the United States has announced a new tariff package that includes

 (i) a 100% duty on “branded or patented” pharmaceutical products that are not made in the country, 

(ii) a 25% duty on heavy trucks 

(iii) a 30% to 50% duty on a number of furniture categories, including upholstered items and cabinets/vanities.   

In an effort to encourage domestic production and lessen reliance on imports, the administration presents the action as a “national security” measure, highlighting the US tariffs on drugs trucks furniture impact India.

The tariff slab: specifics by sector

Drugs: Ad-valorem tariffs on branded or patented medications can reach 100% unless the corporation has manufacturing capacity in the United States or is actively developing it. Potential exemptions for companies investing in U.S. factories are indicated by implementation details.

Heavy trucks: imports of heavy-duty trucks are subject to a 25% levy.

Furniture: 50% on bathroom vanities and kitchen cabinets, 30% on upholstered furniture and extra charges may apply to other lines.

The legal framework and policy foundation (the reasons the United States can do this)

There are several legal avenues for tariff actions in the United States. 

There are two main ones:

• Since 2018, China has been subject to Section 301 of the Trade Act (1974) for “unreasonable” intellectual property and technology practices; numerous lists are still in effect and were recently revised. The courts have strengthened executive latitude by upholding a significant portion of these initiatives.
• Steel and aluminium have already been the subject of national security-framed actions (including distinct Section 232 precedents); authorities are currently re-examining the scope of the vehicle and parts industries. That security narrative is echoed in the new bundle.

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Who is impacted?

• Major international pharmaceutical companies who sell patented drugs, cutting-edge medications in the United States, particularly when the finished product is imported rather than produced locally. If exemptions are limited, analysts definitely caution about possible price hikes and issues with access.
•  Truck OEMs who export  heavy vehicles  to the US market.
• exporters of furniture (upholstered furniture, bathroom and kitchen cabinets) in Asia and Europe. Several nations are already advocating for zero-tariff windows or some relief.

Partial cushions/exemptions: Trading partners are attempting to impose limitations or carve-outs especially the EU and Japan claim that previous agreements may limit drug tariffs (e.g., ≤15%) for their exporters while the new measure’s applicability is still up for debate.

The market and diplomatic response

Markets: Coverage highlights worries about supply chain disruption and inflation especially in the pharmaceutical and consumer durables industries.

Governments:The EU and Japan point to earlier declarations that capped prices on essential products and anticipate that their pharmaceutical and semiconductor exports will be subject to restraint.

Malaysia has officially requested wider exclusions and zero duties for specific exports of furniture, automobiles, and aircraft.

Media and analysts should anticipate increased consumer costs for furnishing  possible pressures on insurance and hospital expenses for pharmaceuticals and new legal issues regarding exemptions and scope.

For stakeholders in India, what might change?

1) Medicines

India is a major global hub for APIs and formulations however the 100% tariff targets branded and patented medications (innovator medicines) rather than generics. Indian exporters of innovator-label pharmaceuticals have little direct exposure but indirect consequences are significant.

• Supply chains: A large number of American-made medications rely on a network of vendors, including Indian APIs and CRAMS. Stricter origin regulations may cause sourcing to shift or onshoring to increase.
• Opportunities: Indian CDMOs with U.S. sites or joint venture plans may profit from U.S. companies localising parts of the chain. On the other hand, payer pressure may increase due to the expenses of foreign inventors in the U.S. market favouring generics in certain therapeutic areas.

2) Furniture: With the help of China+1 reshoring, India has been increasing its furniture exports to the United States. Price competitiveness may be harmed by a 30–50% U.S. tax on specific lines unless India obtains country-specific carve-outs or concentrates on HS codes that are not included. There is a need to keep an eye out for petitions for exemptions similar to Malaysia’s action.

3) Big trucks: Auto component manufacturers may suffer indirectly if OEMs move their sourcing to the United States or Mexico in order to avoid the 25% charge on fully produced units although there is no direct export risk. North American component providers are in a better position.

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How might the pharmaceutical tariff be applied in the United States?

Important queries (according to press and official guidelines):

According to the definition of “branded/patented,” innovative items with active patents or market exclusivity should be covered; generics might not be covered at 100%.

“Made in the U.S.” tests—waivers or reduced tariffs seem to be connected to verified new facility construction or current U.S. production. Recently a number of majors announced investments in U.S. plants that would qualify for assistance.

Differentiation by country—some partners point to current caps but until official notices clarify HS headings and partner coverage, the extent and validity of applying those caps to this new action may be disputed.

Economics: the effects of inflation on consumers

Cabinets and furniture have a high pass-through potential therefore retail prices in US markets are probably going to increase soon.

Pharmaceuticals: Tariffs for innovative pharmaceuticals function similarly to taxes unless they are completely exempt, expect politically sensitive cost-sharing increases, formulary modifications or payer backlash.

Trucks: If import alternatives become limited, the truck levy may increase the cost of fleet purchase, which would have an impact on logistics and freight rates.

Geopolitical context

By focussing on medications, these actions add a health-security component to the tariff-first approach that has transformed U.S. trade since 2018 (Section 301 on China, selective 232 actions). Anticipate increased friend-shoring arguments, WTO battles and retaliatory threats. Further use is encouraged by ongoing litigation that validates parts of earlier Section 301 proceedings.

So Beginning on October 1, the United States will impose a 100% levy on branded medications, a 25% duty on heavy trucks and a 30% to 50% duty on furniture as part of its tariff-led industrial policy. The package seeks to de-risk supply chains and onshore manufacturing but it may also increase costs, lead to conflicts and reorganise global value chains which would have conflicting effects on Indian exporters of furniture, pharmaceuticals, and auto parts. As the policy is operationalised, stakeholders should assess production footprints and country-of-origin, plan for compliance reviews and monitor exemption paths.

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About the Author: Jyoti Verma