Japan secured a 15% tariff exemption on generic pharmaceuticals in the 2025 US-Japan trade deal, benefiting its drug manufacturers entering the US market123.
Despite the exemption, Japanese pharmaceutical companies may face significant tariff hikes (up to 200%) by 2026 if they do not strategically diversify production1.
Generic drugs and their chemical precursors from Japan now enter the US with fewer barriers, boosting competitiveness but intensifying rivalry with EU producers, who also enjoy exemptions34.
President Trump's executive order on tariffs aims to assist American producers while broadly exempting generic medicines, citing national security and economic growth2.
The low-margin nature of generic drugs means even minor regulatory or supply chain shifts could heavily impact profitability for Japanese firms, making exemption especially valuable3.
Sources:
1. https://www.ainvest.com/news/japan-trade-deal-strategic-implications-chip-pharma-sectors-2509/
2. https://www.thepharmaletter.com/generics/us-japan-deal-to-exclude-tariffs-on-generics
3. https://www.ainvest.com/news/assessing-impact-trump-15-tariff-japan-japan-trade-relations-2509/
4. https://subscriber.politicopro.com/article/2025/07/trump-medicines-tariff-will-cause-shortages-in-the-us-experts-warn-00462296