Trump announces plan for 100% tariff on generic drug imports to boost US production

US President Donald Trump’s announcement of plans to raise tariffs on imported generic drugs has sent fresh shockwaves through the global pharmaceutical industry. Under the plan, a 100% tariff would be imposed from August 2028, rising to 200% in August 2029, unless manufacturers decide to invest in building factories and installing machinery in the United States within the specified timeframe.

However, Thailand’s pharmaceutical export figures show that the United States is not a major market for Thai drug manufacturers. Exports to the US account for less than 5% of Thailand’s total pharmaceutical exports, suggesting that the direct impact of the proposed measure on the country may remain limited.

What Thailand must watch more closely, however, is the emerging competition to attract global pharmaceutical production. This could reshape investment flows and alter the industry’s competitive landscape over the longer term.

US market accounts for less than 5%

Thailand is not heavily dependent on the US as a destination for pharmaceutical products, according to trade figures cited in the Thai report.

Thailand exported pharmaceutical products worth 21.505 billion baht in 2025, covering medicines and related goods.

The five largest markets were:

• Myanmar: 2.760 billion baht
• Vietnam: 2.484 billion baht
• Cambodia: 2.018 billion baht
• The Philippines: 1.571 billion baht
• Japan: 1.329 billion baht

The US ranked ninth, receiving exports worth 1.044 billion baht, equivalent to about 4.9% of Thailand’s total pharmaceutical exports.

The figures suggest Thai producers are considerably less exposed to the American market than major global exporters whose business models depend heavily on supplying medicines to the US.

Direct damage from the tariffs may therefore remain limited, particularly because the Thai figures cover the wider category of pharmaceutical products rather than only goods subject to the new US measure.

Regional markets remain Thailand’s core strength

The same pattern continued during the first five months of 2026, when Thailand exported pharmaceutical products worth 8.908 billion baht.

The leading markets from January to May were:

• Vietnam: 1.289 billion baht
• Myanmar: 1.247 billion baht
• The Philippines: 742 million baht
• Japan: 651 million baht
• Malaysia: 572 million baht

The US remained in ninth place, with shipments worth 361 million baht, or about 4% of the total.

These figures underline Thailand’s role as a pharmaceutical manufacturing and distribution base serving Asia, particularly neighbouring ASEAN markets.

The country’s strengths include the production of finished medicines, regional distribution networks and manufacturing standards accepted in overseas markets.

Tariffs form part of a reshoring strategy

The US measure represents more than a conventional trade barrier. It forms part of a broader reshoring strategy aimed at encouraging pharmaceutical companies to manufacture medicines and ingredients inside the country.

Concerns over medicine security intensified after the Covid-19 pandemic exposed the risks of depending too heavily on overseas suppliers for essential drugs, equipment and pharmaceutical ingredients.

Global drug production has long been divided among several major centres.

India has become a leading producer of generic medicines, while China plays a major role in pharmaceutical raw materials and active pharmaceutical ingredients. The US and Europe remain important centres for drug innovation, research and multinational pharmaceutical companies.

The new US policy reflects efforts by governments to reduce supply-chain vulnerabilities by bringing strategically important production closer to domestic markets.

Pharmaceutical exports are broader than affected drugs

The Thai export figures must also be interpreted carefully.

“Pharmaceutical products” is a broad trade category covering several types of medicines and related goods. It cannot be treated as equivalent to the narrower group of patented products currently subject to the US tariff.

The extent of Thailand’s exposure therefore cannot be calculated simply by applying the new tariff to the full value of Thai pharmaceutical exports to the US.

A detailed assessment would require product-level data identifying which shipments fall within the tariff classifications listed in the US proclamation.

Thailand’s larger challenge lies upstream

Thailand’s main concern may not be the immediate tariff impact, but the restructuring of the global pharmaceutical supply chain.

Future competitiveness will increasingly depend on more than low labour costs or the ability to manufacture finished medicines.

Key areas will include:

• Active pharmaceutical ingredients
• Biotechnology
• Biologics
• Pharmaceutical research and development
• Advanced manufacturing
• High-value medical products

Countries able to build complete pharmaceutical ecosystems will be better positioned to attract investment as manufacturers reconsider where to locate factories, laboratories and supply networks.

Thailand could lose opportunities if it remains concentrated at the downstream end of production while rival countries develop stronger research systems, skilled workforces and upstream manufacturing capacity.

Who could gain from the policy?

The United States could benefit if the tariffs encourage manufacturers to establish production facilities, install equipment and expand supply chains within the country.

Pharmaceutical companies prepared to invest in US manufacturing may gain greater access to the American market while reducing their exposure to import duties.

Other countries with strong research capacity, skilled personnel and internationally recognised manufacturing standards could also attract investment as pharmaceutical companies diversify their supply chains.

Who faces greater risk?

The greatest pressure will fall on exporters of affected patented pharmaceutical products that rely heavily on the US market but are unwilling or unable to move production there.

Countries dependent on American pharmaceutical demand could lose competitiveness as tariffs increase the cost of imported medicines.

Economies concentrated in lower-value manufacturing may also miss the next wave of investment if they cannot expand into research, biotechnology, active ingredients and advanced production.

Limited immediate impact, larger strategic question

Thailand’s relatively small share of pharmaceutical exports to the US suggests that the immediate effect of the new tariff may be manageable.

Nevertheless, the measure signals a deeper change in how countries view pharmaceutical production. Competition is moving away from cost alone and towards security, technological capacity and control over critical supply chains.

The central question for Thailand is therefore not simply how much trade may be affected by the US tariff.

It is whether the country can use the restructuring of the global pharmaceutical industry to move from being mainly a regional production base towards becoming a centre for research, advanced medicine and high-value pharmaceutical manufacturing.