U.S. Imposes 100% Section 232 Tariffs on Patented Pharmaceuticals and Ingredients
Trade Update • April 2, 2026
Key Points
- 100% tariff: Applies to patented pharmaceuticals and associated active pharmaceutical ingredients (APIs) listed in Annex I.
- Effective dates: July 31, 2026 for certain large companies listed in Annex III; September 29, 2026 for all other companies.
- Trade deal countries: 15% rate for EU, Japan, South Korea, and Switzerland/Liechtenstein; reduced rate for the UK under the recently concluded pharmaceutical agreement.
- Onshoring + MFN pricing: 0% rate through January 20, 2029 for companies that enter into both MFN pharmaceutical pricing agreements with HHS and onshoring agreements with Commerce.
- Onshoring only: 20% rate for companies with Commerce-approved onshoring plans; increases to 100% on April 2, 2030.
- Generics exempt: Generic pharmaceuticals, biosimilars, and their ingredients are not subject to Section 232 tariffs at this time. Reassessment due within one year.
- Specialty products exempt: Orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody drug conjugates, CBRN medical countermeasures, and animal health products may qualify for a 0% rate.
- ~$400 billion in investment: Already committed by US and foreign pharmaceutical companies ahead of the tariffs taking effect.
- CBP/Commerce guidance: Pending.
President Trump signed a proclamation on April 2, 2026, imposing Section 232 tariffs on patented pharmaceuticals and associated active pharmaceutical ingredients (APIs), citing national security concerns over US dependence on foreign production.
The proclamation establishes a tiered tariff structure designed to incentivize domestic onshoring of pharmaceutical manufacturing while providing pathways for companies to reduce or eliminate their tariff exposure through pricing and investment commitments with the US government.
Rate Structure
The applicable rate for any given company or product depends on origin, whether an onshoring plan has been approved by Commerce, and whether a Most Favored Nation pricing agreement has been executed with HHS.
100% – Standard rate
Applies to all patented pharmaceuticals and APIs in Annex I where no reduced rate applies. Default for companies without onshoring or pricing agreements. Effective September 29, 2026 for most companies.
20% – Onshoring plan approved
For companies with Commerce-approved onshoring plans, or those assessed as likely to have one soon. Rate increases to 100% on April 2, 2030. Subject to periodic reporting, external audits, and enforcement. Fraud or misrepresentation may result in retroactive tariff reimposition.
15% – Trade deal countries
Applies to products of the EU, Japan, South Korea, and Switzerland/Liechtenstein. Lower rate applies to UK products under the US-UK pharmaceutical agreement. Subject to fulfilment of bilateral trade commitments.
10% → 0% – United Kingdom
Initial 10% rate under the US-UK pharmaceutical agreement in principle (as of December 1, 2025). Reduces to zero upon finalization. Commerce to publish a Federal Register notice when the zero rate takes effect.
0% – Onshoring + MFN pricing
Companies that execute both a Commerce onshoring plan and an HHS MFN pharmaceutical pricing agreement pay zero tariff through January 20, 2029. Also applies to companies with agreements in principle assessed as likely to qualify soon.
Exempt – Generics & specialty products
Not subject to Section 232 tariffs at this time. Commerce to review and report to the President within one year on whether action on generics is warranted.
Specialty & orphan products
Orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody drug conjugates, CBRN countermeasures, and animal health products. Exemption requires the product to be from a trade deal country or meet an urgent US health need, as determined by Commerce in consultation with USTR and HHS.
If a product is subject to both a Section 232 tariff and a Column 1 HTSUS duty, the combined rate is capped at the applicable Section 232 rate. If the Column 1 rate exceeds the Section 232 rate, only the Column 1 rate applies. Where more than one Section 232 rate could apply, the lowest applicable rate governs.
Why Now?
The Commerce Secretary’s Section 232 investigation concluded that US dependence on imported pharmaceuticals poses a direct threat to national security. Key findings include: approximately 53% of patented pharmaceutical products distributed in the US are produced abroad; only 15% of patented APIs by volume are manufactured domestically; and foreign government intervention has undermined the competitiveness of the US patented pharmaceutical industry, creating fragile supply chains with limited domestic fallback in the event of geopolitical disruption.
The fact sheet notes that the impending tariffs have already spurred approximately $400 billion in new investment commitments from US and foreign pharmaceutical companies, to be spent in the United States during President Trump’s current term.
FTZs and Drawbacks
Covered pharmaceutical products admitted to a US foreign trade zone on or after the effective date must enter under “privileged foreign status” (19 CFR 146.41) unless eligible for domestic status. Drawback is available with respect to duties imposed by this proclamation. US-origin pharmaceutical products are not subject to the tariffs imposed by this proclamation.
Commerce/CBP Guidance & Importer Action
Commerce and HHS are required to publish onshoring plan criteria in the Federal Register. The list of company-specific agreements in Annex II will define which large companies face the earlier July 31 date.
CBP guidance on entry filing requirements and Chapter 99 subheading reporting is expected to follow. Commerce is also required to report to the President within 90 days on the status of ongoing pharmaceutical pricing and onshoring negotiations.
Importers should review Annexes against their product classifications and prepare for the effective dates.
The information presented is general in nature, and is not intended to constitute legal advice with respect to any event or occurrence, and may not be considered as such. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information. Due to the complexity of Customs Regulations, valuations are based on information currently available and should not be considered binding, we recommend obtaining National Customs Rulings in areas of uncertainty.
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.
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