New Delhi, India
The United States has decided to remove the ‘ad valorem’ tariff on certain medicines used to treat rare diseases and their essential ingredients imported from India and 19 other countries. The move is expected to reduce the tariff burden on imports of these medicines and pharmaceutical ingredients into the US.
According to a notice issued by the US government, eligible products may be subject to a 0% ad valorem tariff. The exemption applies to countries that have existing or future trade and security framework agreements with the United States.
India and These Countries Get Relief
Besides India, the countries and regions included under this arrangement are Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, the United Kingdom, and Vietnam.
The decision is particularly significant for medicines used to treat rare diseases and their active or essential ingredients. The supply chains for such products often depend on multiple countries. Lower tariffs could reduce the cost of importing these products into the United States.
What Is an ‘Ad Valorem’ Tariff?
An ad valorem tariff is a customs duty imposed as a fixed percentage of the monetary value of an imported product. This means that the higher the value of a product, the higher the tariff amount can be.
Therefore, removing or reducing an ad valorem tariff to zero can have a direct impact on the overall cost of eligible imported products.
Exemption Linked to Trade Agreements
The US notice states that eligible products originating from the specified countries may qualify for a zero-percent tariff rate. The arrangement is linked to existing or future trade and security framework agreements with the United States.
For India, the decision could be particularly significant because the Indian pharmaceutical industry plays an important role in the US market. However, the relief will not apply universally to all medicines. The benefit will be available only to products that meet the eligibility criteria and conditions specified in the notice.
Relief for Rare Disease Medicines
Medicines used to treat rare diseases are often specialized and produced in relatively limited quantities. The cost and availability of such products are therefore important concerns. Tariff relief could reduce cost pressures associated with importing these medicines and their essential ingredients.
The US decision is expected to make trade conditions easier for eligible pharmaceutical products coming from India and the other covered countries. However, the actual benefit will depend on the eligibility of individual products and the conditions applicable under US import regulations.
