New U.S. Section 232 tariffs on imported patented pharmaceuticals and associated pharmaceutical ingredients took effect for remaining covered companies at 12:01 a.m. Eastern Time on September 29, following an earlier implementation phase for specified companies beginning July 31. The general tariff rate is 100% ad valorem for covered products listed under the measure, including patented medicines and associated pharmaceutical ingredients, although company-specific onshoring agreements, trade arrangements and specialty-product exemptions create several lower tariff levels.
The measure stems from the U.S. government's pharmaceutical Section 232 action announced in April.
Companies specifically listed in the earlier proclamation became subject to the tariff framework on July 31, while other covered companies entered the system on September 29.
The general rate for listed patented pharmaceuticals and associated ingredients is 100%.
That rate, however, does not apply uniformly to every imported pharmaceutical product.
Products made by companies with Commerce-approved plans to onshore pharmaceutical or pharmaceutical-ingredient production are subject to a 20% tariff.
Under the current framework, that 20% rate is scheduled to rise to 100% on April 2, 2030, unless the policy is changed beforehand.
Companies that have fully executed, or are negotiating qualifying agreements with the U.S. government involving MFN drug pricing and the onshoring of production and R&D may receive a zero Section 232 tariff.
Different rates also apply to several major U.S. trading partners.
Covered products from the European Union, Japan, South Korea, Switzerland and Liechtenstein are subject to a 15% tariff under the pharmaceutical framework.
Products from the United Kingdom are subject to a 10% rate, with the possibility of a further reduction to zero if required under a future U.S.-UK pharmaceutical agreement.
The framework also provides zero-tariff treatment for selected specialty pharmaceutical categories when the applicable conditions are satisfied.
Those categories include orphan drugs, nuclear medicines, plasma-derived therapies, fertility drugs, cell therapies, gene therapies, antibody-drug conjugates and medical countermeasures related to chemical, biological, radiological and nuclear threats.
The Commerce Department may also approve zero-tariff treatment for certain pharmaceutical products that meet an urgent U.S. health need.
Generic pharmaceutical products and their associated ingredients, including biosimilars, are not currently subject to the Section 232 pharmaceutical tariffs.
The exemption also includes generic pharmaceutical ingredients purchased for the Strategic API Reserve.
The measure extends beyond finished pharmaceutical products.
A Federal Register implementation notice published on September 23 modified the Harmonized Tariff Schedule and listed numerous Chapter 29 organic chemical tariff lines associated with pharmaceutical ingredients and related chemical products that fall within the scope when the applicable conditions are met.
The final tariff applied to an import therefore depends on factors including product classification, country of origin, manufacturer and whether the company has an approved onshoring or other qualifying agreement.
Section 232 operates under the U.S. Trade Expansion Act of 1962 and allows import adjustments on national-security grounds.
The U.S. government said in its pharmaceutical action that heavy dependence on foreign patented drugs and pharmaceutical ingredients could threaten national security and that the tariff framework is intended to encourage additional domestic production.
The September 29 rules apply to covered goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time.
