Trump Administration Announces Section 232 Tariffs on Pharmaceuticals

On April 2, 2026, the White House issued a proclamation imposing new tariffs on patented pharmaceutical products. These tariffs stem from a Department of Commerce investigation, which was initiated on April 1, 2025, under Section 232 of the Trade Expansion Act of 1962.

The proclamation imposes tariffs ranging from 0%‒100% on patented pharmaceuticals and active pharmaceutical ingredients, including preferential treatment to certain companies that have reached onshoring agreements with the United States. It also directs the continuation of negotiations between the Trump administration and pharmaceutical companies to onshore production to the United States. The new duties take effect on July 31, 2026, for a select list of companies found in Annex III, and on Sept. 29, 2026, for all other companies.

General Structure

The proclamation imposes a tiered tariff structure based on the behavior of covered companies and the status of trade agreements with foreign countries:

• Annex I defines the list of patented pharmaceuticals and associated pharmaceutical ingredients subject to the 100% tariff. However, these covered products are subject to several company- and country-level exceptions, which can lower the applicable tariff rate.
• Annex II defines the list of companies with existing agreements with the secretary of commerce related to Section 232 tariffs on pharmaceutical products and ingredients.
• Annex III defines the list of companies whose tariff treatment shall be effective 120 days from the signing of the proclamation starting July 31, 2026. For all other companies, tariffs on covered products will enter into force 180 days from signing on Sept. 29, 2026.
• Annex IV defines the list of pharmaceuticals and ingredients subject to a 0% “at this time.”
• Drawbacks are available for duties imposed by this proclamation.

Company-Level Tariff Treatment

Onshoring Agreements

For products of companies that have reached onshoring agreements with the United States, approved by the secretary of commerce, the applicable tariff rate will be 20%. This includes agreements in principle, defined as “[companies] that the Secretary assesses are likely soon to have [agreements approved by the Secretary of Commerce].” However, the 20% rate escalates to 100% after four years on April 2, 2030, giving companies a hard deadline to complete their onshoring processes or face significantly higher tariff treatment.

The secretaries of the Department of Commerce and Health and Human Services (HHS) will establish criteria for onshoring plans, to be subsequently published in the Federal Register. Onshoring plans are subject to approval, monitoring and enforcement by the secretary of commerce. Companies must submit periodic reports to document progress towards fulfilling onshoring milestones, which may be subject to an external audit. In cases where companies engage in fraud or deliberately mislead the U.S. government, tariffs may be imposed retroactively or proactively on covered imports.  

MFN Pricing Agreements

For products of companies that have entered into Most Favored Nation (MFN) pharmaceutical pricing agreements with the secretary of HHS, and an onshoring agreement, the applicable tariff rate will be 0%. This includes agreements in principle, defined as “companies that [Commerce Secretary] determines are likely to be eligible soon.” However, the 0% rate expires on Jan. 20, 2029, after which the tariff rate could escalate to either 20% or 100%, depending on the status of onshoring arrangements in the United States and thus coverage under the prior exception.

The secretary of commerce may increase tariff rates for companies that fail to fulfill commitments made under MFN pricing agreements. Companies listed in Annex II of the proclamation are subject to this 0% tariff rate.

Country-Level Tariff Treatment

15% Tariff Rate

The European Union (EU), Japan, South Korea (Republic of Korea), and Switzerland and Liechtenstein jointly, face a 15% applicable tariff rate. Companies exporting from these countries, which have MFN pricing agreements, including in principle, with the United States , would receive the lower applicable rate of 0%.

10% Tariff Rate

The United Kingdom (UK) faces a 10% applicable tariff rate, which may be reduced to 0% “to the extent required by any future agreement … on pharmaceutical pricing.” Also on April 2, the Office of the U.S. Trade Representative released the ratified terms of an agreement with the United Kingdom regarding pharmaceutical pricing, which was agreed to in principle on Dec. 1, 2025. According to the agreement, UK pharmaceutical products will face “no tariffs” from Jan. 1, 2026, through Jan. 19, 2029, “provided that all major [UK] pharmaceutical companies enter into … the MFN and Tariff Agreements negotiated with [the Departments of HHS and Commerce].” According to the British government, UK pharmaceutical exports into the United States will enter “completely tariff free, for at least 3 years,” suggesting that the terms of the agreement have already been met. Any change in the 10% tariff faced by UK pharmaceutical imports will be published in the Federal Register by the Department of Commerce. 

100% Tariff Rate

Countries not listed above face the base applicable tariff rate of 100%. Companies exporting from these countries that have onshoring or MFN pricing agreements, including in principle, with the United States, would receive the lower applicable rate of 20% or 0%, respectively. The Secretary of Commerce, in consultation with the U.S. Trade Representative, may increase tariff rates for countries that fail to fulfill commitments made under agreements with the United States.

Exceptions

Certain product categories are exempt from the new tariffs, provided that the secretaries of HHS and Commerce, in consultation with the U.S. Trade Representative, determine they are either (1) products of a jurisdiction that has current or forthcoming trade and security framework agreement or (2) meet an urgent U.S. health need. These include:

• Orphan drugs (drugs that carry an orphan designation under the Orphan Drug Act)
• Nuclear medicines
• Plasma-derived therapies
• Fertility treatments
• Cell and gene therapies
• Antibody drug conjugates
• Medical countermeasures related to chemical, biological, radiological, or nuclear threats
• Animal health pharmaceuticals
• Other specialty pharmaceutical products identified by the secretary of commerce, which would be published in a subsequent notice on the Federal Register

Generic pharmaceuticals and their associated ingredients are exempt from tariff treatment under this report “at this time.” The secretary of commerce will report to the president within one year regarding whether action should be taken to adjust the import of generics and their associated ingredients. This includes the purchase of generics and ingredients of the Strategic API Reserve.

Imports of U.S.-origin pharmaceutical products are exempt from tariffs imposed by the proclamation.

Application of Multiple Rates

If a product is subject to Section 232 pharmaceutical tariffs and duties under Column 1 of the Harmonized Tariff Schedule of the United States (HTSUS), the sum of these duties will equal the applicable Section 232 pharmaceutical rate, unless the Column 1 Duty Rate is higher. If the Column 1 Duty Rate is greater than the applicable 232 rate, then only the Column 1 Duty rate shall apply. As a result, the 232 pharmaceutical tariff functions as a ceiling, rather than additive duty. For example:

• A product with an applicable 232 pharmaceutical tariff rate of 100% and Column 1 Duty Rate of 30% would face a combined burden of 100%.
• A product with an applicable 232 pharmaceutical tariff rate of 20%, because of an onshoring agreement, and a Column 1 Duty Rate of 30% would face a combined burden of 30%.

This dynamic does not apply to tariff treatment of products of the UK.  

Separately, when calculating the Section 232 pharmaceutical tariff burden, if a product is subject to more than one duty defined in the proclamation, the lowest applicable rate should apply. For example:

A product from a company with an onshoring agreement with the United States, making it eligible for the 20% rate, which is exported from the EU, which faces a 15% rate, would face the lower of the two rates, 15%.

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THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING NEW EXECUTIVE TARIFFS ON PHARMACERTICALS. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.