On April 2, 2026, President Trump issued a Proclamation imposing tariffs of up to 100 percent under Section 232 of the Trade Expansion Act of 1962 on certain patented pharmaceuticals and associated pharmaceutical ingredients.
Rather than imposing a uniform tariff, the Proclamation establishes a differentiated framework that relies upon product type, country of origin, and, in some instances, company-specific commitments relating to U.S. production and pricing.
As a result, impacted stakeholders must pay close attention not only to tariff classification and product origin, but also to upcoming implementation guidance from the Department of Commerce and how this policy interacts with ongoing trade and health policy developments.
A Narrower, Tiered Tariff Regime
The Proclamation follows the completion of a year-long investigation, led by the Department of Commerce, reviewing the effects on the national security of imports of pharmaceuticals and pharmaceutical ingredients.
Commerce’s pharmaceutical Section 232 investigation, initiated in April 2025, was framed broadly to cover finished pharmaceutical products, active pharmaceutical ingredients (“APIs”), key starting materials, and derivative products. The April 2 Proclamation is narrower in one respect: its principal tariff action applies to patented pharmaceuticals and associated pharmaceutical ingredients, while generic pharmaceuticals and their associated ingredients, including biosimilar products, are not subject to the tariffs at this time. The Proclamation is more operationally complex, however, than a conventional Section 232 action because it combines a high default tariff rate with multiple pathways to reduced or zero-duty treatment.
The Proclamation establishes the following tariff structure:
- 100 percent ad valorem duty applies by default to covered patented pharmaceuticals and associated pharmaceutical ingredients identified in Annex I.
- 20 percent ad valorem duty applies to products of companies that have, or that the Secretary of Commerce assesses are likely soon to have, approved onshoring plans; that rate is scheduled to increase to 100 percent on April 2, 2030.
- 0 percent duty rate, through January 20, 2029, is available for companies eligible for the onshoring pathway that also have MFN pharmaceutical pricing agreements with the Secretary of Health and Human Services (“HHS”).
- 15 percent ad valorem duty rate applies to products of Japan, the European Union, the Republic of Korea, and Switzerland and Liechtenstein, unless a lower rate applies.
- 10 percent ad valorem duty rate applies to products of the United Kingdom, with the possibility of reduction to zero to the extent allowed by the newly released U.S.-UK pharmaceutical pricing agreement.
- The tariffs will come into effect in 120 days for certain large companies, and 180 days for smaller companies, according to the Fact Sheet.
Generics Among Exclusions — For Now
One of the most consequential immediate features of the Proclamation is its decision not to adjust imports of generic pharmaceuticals and their associated ingredients, including biosimilar products, at this time.
That exclusion, however, should not be understood as permanent. The Proclamation and White House Fact Sheet state that the treatment of generic products will be reassessed in one year, and the Proclamation directs continued review of whether further action may be warranted.
Other Exemptions and Entry Considerations
The Proclamation introduces a zero-tariff category for an array of specialty pharmaceutical products and specific related ingredients. This exemption includes drugs granted orphan drug designation for all approved uses, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody-drug conjugates, medical countermeasures against chemical, biological, radiological, and nuclear hazards, additional specialty pharmaceuticals named by the Secretary of Commerce, and animal health products.
Drawback for tariffs imposed under this measure is permitted, according to further provisions in the Proclamation. At present, imports of U.S.-origin pharmaceutical products are exempt from these tariffs, and products brought into a U.S. foreign trade zone after the effective date will generally be admitted as privileged foreign status.
Tariffs will be enforced for companies listed in Annex III beginning July 31, 2026, and for all other companies starting September 29, 2026.
Tariff Differentiation Through Bilateral Engagement
The differentiated tariff rates applicable to products from specific trading partners add another layer of complexity for multinational pharmaceutical supply chains. While the Proclamation affords reduced rates for products of the European Union, Japan, Korea, Switzerland, Liechtenstein, and the United Kingdom, eligibility for those rates will still turn on country of origin determinations under U.S. customs law. For products involving multi country manufacturing, processing, or formulation, questions of substantial transformation and origin attribution may become outcome determinative. In addition, the Proclamation leaves room for further bilateral engagement, particularly with respect to pharmaceutical pricing arrangements, suggesting that country specific treatment may continue to evolve through negotiations rather than through static tariff schedules alone.
Onshoring and MFN Pricing Pathways
In addition to different treatment for certain trading partners, the Proclamation delegates broad authority to the Secretary of Commerce to enter into and implement company-specific tariff arrangements and expressly authorizes the Secretary to monitor and enforce those agreements. Companies with approved onshoring plans may qualify for the 20 percent rate, while companies that pair an approved onshoring plan with an MFN pharmaceutical pricing agreement with HHS may qualify for the zero-tariff pathway through January 20, 2029. The fact sheet likewise states that Commerce and HHS will provide pathways for companies to enter into onshoring and MFN pricing arrangements with the U.S. Government.
The Proclamation also contemplates meaningful compliance oversight. Commerce is directed to establish criteria for onshoring plans, and qualifying companies may be subject to periodic reporting and external audits. The Secretary of Commerce further retains authority to increase tariff rates, including retroactively, where a company has engaged in fraud or deliberately misled the U.S. Government regarding its onshoring commitments.
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In this dynamic regulatory landscape, Cassidy Levy Kent’s team of attorneys, licensed customs brokers, compliance experts, economists, and trade specialists stand ready to guide companies through complex supply chain decisions and tariff compliance, including those arising under Section 232. By helping assess and optimize market access strategies, the team at Cassidy Levy Kent helps businesses minimize obstacles and uncover new opportunities. As companies navigate these evolving rules, thoughtful planning and careful evaluation of supply chain scenarios will be essential for long-term success.