The Trump administration has excluded generic drugs from a baseline 15% tariff on imports from Japan under a new trade deal between the two countries.
The “reciprocal” tariffs on Japanese products are 0% for “generic pharmaceuticals, generic pharmaceutical ingredients, and generic pharmaceutical chemical precursors,” according to a Sept. 4 executive order by President Donald Trump.
The latest policy formalizes a framework U.S.-Japan trade agreement that Trump announced in July. To reach the deal, Japan has pledged to make $550 billion in investments into the U.S.
The Trump administration finalized the trade deal with Japan after reaching a similar scheme for the EU, which also includes effectively zero levies on generic pharmaceuticals, their ingredients and chemical precursors. For branded drugs, the EU deal caps the import tariff on pharmaceutical goods from the region to the U.S. at 15%.
Trump’s latest executive order on the Japan pact did not mention branded medicines.
To the U.S., the EU is a far bigger drug exporter than Japan by value. Ireland, an EU member, has been the biggest source of U.S. drug imports, with $50 billion worth of its drug products shipped into the U.S. in 2024, according to The Wall Street Journal.
Germany exported about $17 billion of pharmaceutical products to the U.S. last year.
In contrast, Japan’s drug imports to the U.S. were about $7.5 billion during 2024.
By comparison, India and China, which are major exporters of cheaper generic drugs, contributed $12 billion and $8 billion, respectively, to U.S. pharmaceutical imports in 2024.
Meanwhile, pharmaceutical products are also currently exempt from a 39% reciprocal tariff that the Trump administration placed on Switzerland, which was the U.S.’ second-largest source of drug imports last year, sending $19 billion in drug value in 2024. Switzerland is still trying to work out a trade deal with Trump.
Similarly, pharmaceuticals are exempted from the 10% baseline duties that the U.S. has implemented on imports from the U.K., which trailed slightly behind Japan in its 2024 drug imports to the U.S. by value.
These decisions come as Trump administration mulls over sector-specific tariffs on pharmaceuticals, which the President has threatened could reach as high as 250%. The industry is now bracing for results from the Department of Commerce’s Section 232 investigation into the potential implications of pharmaceutical imports on U.S. national security. Launched in April, the investigation could determine the level of tariffs.
As Trump’s stated goal for the tariffs is to bring pharmaceutical manufacturing into the U.S., the President has indicated that he would give drugmakers some time to prepare.
During a cabinet meeting in July, Trump said he would give companies “about a year, a year and a half” before adding taxes on pharmaceutical imports.