On April 2, 2026, President Trump issued a proclamation adjusting imports of patented pharmaceuticals and associated pharmaceutical ingredients, including active pharmaceutical ingredients (APIs). The action followed an investigation by the Secretary of Commerce under Section 232 of the Trade Expansion Act of 1962, which the proclamation states concluded that imports of patented pharmaceuticals and related inputs were being imported into the United States in such quantities and under such circumstances as to threaten to impair U.S. national security. The proclamation applies to patented pharmaceutical products and associated pharmaceutical ingredients identified in annexes to the proclamation. A fact sheet published concurrently with the proclamation outlines key terms of the action.
Overview: The proclamation imposes a 100% ad valorem tariff on imports of most patented pharmaceuticals and associated pharmaceutical ingredients. The tariffs apply to goods entered for consumption, or withdrawn from warehouse for consumption, beginning July 31, 2026, for certain listed companies, and September 29, 2026, for other companies. Imports of U.S.-origin pharmaceutical products are excluded from the tariffs. Generic pharmaceuticals, biosimilars, and their associated ingredients are not subject to Section 232 tariffs at this time, although the Secretary of Commerce has been directed to review, within one year, whether future action may be warranted.
Reduced Rates Based on Country of Origin: The proclamation establishes several alternative tariff rates based on the country of origin of subject imports and company‑specific commitments. Imports of patented pharmaceuticals and associated ingredients of the European Union, Japan, the Republic of Korea, and Switzerland and Liechtenstein (treated jointly for tariff purposes) are subject to a 15% tariff, unless a lower rate applies. Patented pharmaceuticals and associated ingredients of the United Kingdom are subject to a 10% tariff, with the possibility of reduction to zero pursuant to a future bilateral pharmaceutical pricing agreement. Where multiple tariff rates could apply, the lowest applicable rate governs.
Reductions Tied to Onshoring and MFN Agreements: The proclamation also provides for reduced or zero tariffs tied to onshoring and pricing commitments. Companies with onshoring plans approved by the Secretary of Commerce are eligible for a 20% tariff rate, which is scheduled to increase to 100% four years after the date of the proclamation. Companies that enter into both onshoring agreements and Most‑Favored‑Nation (MFN) pharmaceutical pricing agreements with the Department of Health and Human Services are eligible for a zero tariff rate through January 20, 2029. The Secretary of Commerce is authorized to monitor compliance with these commitments and to increase tariffs if companies fail to meet agreed obligations.
Exempt Products: Certain specialty pharmaceutical products are exempt from tariffs, subject to specified conditions. These include orphan drugs, nuclear medicines, plasma‑derived therapies, fertility treatments, cell and gene therapies, antibody drug conjugates, certain medical countermeasures, animal health products, and other specialty products designated by the Secretary of Commerce. To qualify, the products must either originate from jurisdictions with relevant trade and security agreements or meet an urgent U.S. health need, as determined by the Secretary of Health and Human Services.
Takeaways
The proclamation introduces a differentiated tariff framework for patented pharmaceuticals and related ingredients, with rates varying based on product type, country of origin, and company‑specific onshoring and pricing commitments. Companies with cross‑border pharmaceutical supply chains should assess their exposure across multiple tariff tiers, including default 100% duties, preferential rates under trade arrangements, reductions tied to onshoring and MFN pricing agreements, and product‑level exemptions. The regime also establishes ongoing monitoring, enforcement, and adjustment mechanisms, underscoring the need for coordinated trade, customs, regulatory, and commercial planning across jurisdictions. Businesses should therefore continue to monitor further actions taken by the administration, which may either provide some relief from the tariffs or eliminate carve-outs. Businesses should also stay aware that Section 232 investigations are ongoing in adjacent sectors such as personal protective equipment, medical consumables, medical equipment and devices, as well as robotics. These could result in additional tariffs affecting these product categories.
