Overview
On April 2, 2026, President Trump issued a proclamation imposing tariffs on patented pharmaceutical products and their ingredients under Section 232 of the Trade Expansion Act of 1962. The tariffs, which can reach as high as 100%, were imposed to address the national security threat that the administration believes is posed by US reliance on foreign sources of such merchandise. This alert summarizes the key features of the tariff regime and identifies important exceptions that may benefit importers. The tariffs will take effect on July 31, 2026, for certain large pharmaceutical companies (listed in Annex III to the proclamation) and September 29, 2026, for all others. Generic pharmaceuticals and biosimilars are expressly excluded from the tariffs.
Importers of covered products should carefully review the proclamation and annexes to determine the new tariff’s effects on their merchandise; such reviews should include evaluating country-of-origin implications. Importers also should consider steps such as onshoring or pricing agreements, which come with lower duty rates. Finally, importers should watch for further guidance from the Department of Commerce and the Department of Health and Human Services (HHS) and prepare for further changes, as the new regime has built-in escalators that will increase rates in several years absent further executive action.
In Depth
Background
As part of his administration’s broader protectionist push, President Trump directed the Secretary of Commerce Howard Lutnick to conduct several investigations pursuant to Section 232 of the Trade Expansion Act of 1962. One such investigation was to “determine the effects on national security of imports of pharmaceuticals, pharmaceutical ingredients, and related products.” The investigation found that the United States is heavily reliant on imports despite being a leader in pharmaceutical research and development. The secretary argued that this dependence threatens US access to life-saving medications in the event of global supply chain disruptions. It is this investigation that serves as the basis for the imposition of the new tariffs.
The new tariffs
What’s covered: Patented pharmaceutical articles
The tariffs apply to “patented pharmaceutical articles,” which the annexes to the proclamation define as products that:
- Are subject to a valid, unexpired US patent.
- Are listed in the FDA’s Orange Book (Approved Drug Products with Therapeutic Equivalence Evaluations) or Purple Book (Lists of Licensed Biological Products).
- Include ingredients (APIs and key starting materials) for such articles.
Tariff rates
The proclamation establishes a tiered tariff structure based on several factors, including the country of origin and whether the importer has entered into agreements with the US government.
| Category | Tariff Rate |
|---|---|
| Default rate (patented pharmaceuticals and ingredients) | 100% |
| Trade deal countries (currently, EU Member States, Japan, South Korea, Switzerland/Liechtenstein) | 15% |
| United Kingdom | 10% (subject to further reduction under the US-UK pharmaceutical agreement) |
| Companies with approved onshoring plans | 20% (rising to 100% on April 2, 2030) |
| Companies with most-favored nation (MFN) pricing and onshoring agreements | 0% (through January 20,2029) |
Importantly, if a product is subject to more than one duty rate, the lowest rate applies.
For most covered products, the Section 232 tariff rates shown above are “all-inclusive,” meaning they include the base MFN rate that would otherwise apply under the Harmonized Tariff Schedule of the United States (HTSUS). In other words, if a product has an existing MFN duty rate that is lower than the applicable Section 232 rate (100%, 15%, or 20%), the sum of the MFN rate and the Section 232 duty equals the rate in the proclamation. If the MFN rate exceeds the Section 232 rate, only the MFN rate applies. This effectively caps the duty at the stated Section 232 rates for most products. Importantly, this “all-inclusive” treatment does not apply to UK-origin products. For those articles, the 10% rate stacks on top of the applicable MFN tariff rate.
The proclamation authorizes the secretary of Commerce to increase tariff rates on companies that fail to fulfill commitments under onshoring plans or agreements, including the potential to impose tariffs retroactively in cases of fraud or deliberate misrepresentation.
Tariff exceptions
US-origin products
Imports of US-origin pharmaceutical products are not subject to the tariffs. The annexes provide a zero rate for pharmaceutical products with an API packaged in dosage form that is a product of the United States.
Generic pharmaceuticals
Generic pharmaceuticals, biosimilars, and their associated ingredients are currently expressly excluded from the tariffs. The secretary of Commerce will reassess this exclusion within one year. A “generic pharmaceutical article” is defined as an FDA-approved pharmaceutical article (and associated ingredients) that is not subject to a valid, unexpired US patent and is off exclusivity. This includes products approved pursuant to any of the following:
- An abbreviated new drug application (ANDA) under Section 505(j) of the Federal Food, Drug, and Cosmetic Act.
- A new drug application under Section 505(b)(2) that has been deemed therapeutically equivalent to a listed drug.
- A biosimilar biologics application under Section 351(k) of the Public Health Services Act.
- An application for an authorized generic drug or authorized biological product, provided the products are imported by a generic or biosimilar manufacturer.
Specialty pharmaceuticals
Certain specialty pharmaceutical products are eligible for a zero rate, provided they are from a jurisdiction that has a trade and security framework agreement with the United States, or they meet an urgent US health need. Eligible specialty products include:
- Orphan drugs (drugs for which all approved indications are designated as orphan pursuant to the Orphan Drug Act and its implementing regulations).
- Nuclear medicines.
- Plasma-derived therapies.
- Fertility treatments.
- Cell and gene therapies.
- Antibody drug conjugates.
- Medical countermeasures related to chemical, biological, radiological, and nuclear threats.
- Pharmaceutical products for animal health.
- Other specialty pharmaceutical products to be identified by the secretary of Commerce.
The secretary of Commerce will publish Federal Register notices when these exemption determinations are made.
Other exempted articles (Annex IV)
Annex IV to the proclamation lists specific HTSUS codes that are subject to a zero-tariff rate. These cover a broad range of pharmaceutical chemicals, vitamins, hormones, antibiotics, and other pharmaceutical preparations. Notably, products listed in Annex IV are also exempt from the temporary import surcharge imposed under Proclamation 11012 on February 20, 2026.
Effective dates
The tariffs take effect on July 31, 2026, for those companies listed in Annex III, and September 29, 2026, for all others.
Key takeaways
First and foremost, importers of pharmaceuticals should review their product portfolios to determine which of their imports will be subject to the new tariffs, with a particular emphasis on evaluating country-of-origin implications. Products from trade deal countries (EU Member States, Japan, South Korea, Switzerland/Liechtenstein, and the UK) face significantly lower tariff rates than products from other countries. Importers also should review which products will be covered by the various exceptions to the new tariffs (e.g., generics and orphan drugs).
Additionally, importers should take the following steps:
- Consider onshoring and pricing agreements. Companies that enter into MFN pricing agreements with HHS and onshoring agreements with Commerce can reduce their tariff rates to zero through January 2029. Companies that sign onshoring agreements only will face a 20% rate.
- Watch for further guidance. The Departments of Commerce and HHS will publish additional guidance regarding the criteria for onshoring plans and the process for entering into MFN pricing agreements. The secretary of Commerce will also publish Federal Register notices identifying additional specialty products that may qualify for exclusions.
- Prepare for further changes. The tariff regime includes built-in escalators: the 20% onshoring-plan rate increases to 100% on April 2, 2030, and the zero-rate MFN pricing benefit expires on January 20, 2029. The secretary will also reassess the generic pharmaceutical exclusion within one year.