U.S. President Donald Trump signs an executive order on researching the effects of psychedelic drugs in medical treatment for veterans, on Saturday, April 18, 2026 in the Oval Office at the White House in Washington, D.C. The Washington Post | The Washington Post | Getty ImagesPresident Donald Trump said generic drugs imported into the U.S. will face zero tariffs for two years starting August 1, before a 100% levy takes effect in August 2028 and rises to 200% a year later.The phased schedule is intended to push generic drugmakers to move production onshore, Trump said in a social media post Tuesday, describing the escalation as "a penalty" for companies that don't build plants and facilities in the U.S. within the grace period. Tariffs on patented and branded drugs will remain unchanged, Trump said. The president imposed a 100% levy on patented pharmaceutical products and ingredients under Section 232 on April 2, while exempting generic drugs, biosimilars, and related ingredients. Larger drugmakers were given 120 days before the 100% tariff rate goes into effect, and smaller drugmakers, which rely on contract manufacturers, had 180 days before that rate hits. More than a dozen major drugmakers, including Eli Lilly, Pfizer and Novo Nordisk, have struck deals with Trump to lower the prices of new and existing medicines. Those agreements are part of the president's "most favored nation" policy, which ties U.S. drug prices to cheaper ones abroad, and exempts the companies from tariffs for three years.Trump has used tariff threats and his most-favored-nation pricing policy to press drugmakers into charging Americans no more than patients in other high-income countries.The stakes are high for India, as the country's pharmaceutical companies supply nearly 50% of all generic medicines consumed in America. The U.S. accounts for about a third of India's pharma exports, mostly cheaper versions of popular drugs, annually. Chinese firms dominate the upstream supply of active pharmaceutical ingredients, such as amoxicillin and heparin.