The move, revealed following the recent Shanghai Cooperation Organisation (SCO) summit, highlights a significant realignment of global supply chains and economic alliances in response to President Donald Trump’s escalating 'America First' trade offensive.
Amid mounting global trade tensions, China has eliminated its 30% import duty on Indian pharmaceutical products, offering a vital $10-15 billion market lifeline to Indian exporters simultaneously hit by a crippling 100% US tariff on branded and patented drugs.
The global pharmaceutical landscape is undergoing a swift, dramatic transformation as fallout from the US-China trade war creates new economic corridors. On September 28, 2025, in a move hailed as a "strategic partnership," China immediately cut its hefty 30% import levy on all Indian pharma products—including generics, APIs, and formulations—down to zero. This opens a substantial $10-15 billion duty-free market for Indian companies, providing a crucial escape valve from a dire new trade barrier in their largest export destination, the United States.
The timing is far from coincidental. Just days before, on September 25, President Trump announced a staggering 100% tariff on US imports of branded or patented pharmaceutical products, effective October 1, 2025. This tariff, which exempts only firms actively building US manufacturing plants, poses an existential threat to major Indian pharmaceutical players like Sun Pharma, Dr. Reddy’s, and Cipla, who rely on the US for a significant portion of their revenue, even though the bulk of India's exports are unbranded generics. While generic drugs are theoretically spared, the potential for the levy to be expanded to complex generics and branded generics has injected deep uncertainty into the $7.5 billion annual pharma trade between India and the US.
China's zero-duty policy effectively counters the US protectionist measure, providing Indian exporters with an immediate and considerable cost advantage. With a 0% duty, Indian drugs gain an estimated 20-25% price competitiveness boost over European rivals in the vast Chinese market. This concession, framed by Beijing as “reciprocal goodwill” following high-level talks between PM Modi and President Xi Jinping at the SCO summit, is a clear strategic play to capitalize on US-India trade tensions and secure low-cost generics for China’s $200 billion domestic market.
The coordinated response by China and India in the pharmaceutical sector underscores that US tariffs are not only disrupting supply chains but are actively driving non-Western economic powers toward closer bilateral cooperation.
