Trump’s Pharma Tariff Ultimatum

On April 2, 2026, President Trump issued a proclamation under Section 232 of the Trade Expansion Act of 1962 imposing 100% tariffs on imports of patented pharmaceuticals — i.e., small molecule or biologic products listed in the Food and Drug Administration’s (FDA) Orange Book or Purple Book — and their active ingredients.  Covered products are listed in Annex I of the proclamation, subject to certain exceptions discussed below. 

The new tariffs have a staggered effective date, coming into effect on July 31, 2026 for certain large companies and on September 29, 2026 for all others.  Companies may also avail of preferential tariff treatment until 2029 if they strike drug pricing and domestic manufacturing deals with the administration. Generic pharmaceutical products, including biosimilar products, and designated orphan drugs (treating rare diseases) are not affected by the new tariffs.

These tariffs were announced nearly one year after President Trump first initiated a formal Section 232 investigation to consider tariffs on pharmaceuticals and ingredients.  This also follows the administration’s September 2025 threats to impose 100% tariffs on certain pharmaceutical products, which were ultimately delayed to encourage the negotiation of company-specific agreements trading certain commitments regarding drug pricing and domestic manufacturing.  The authority for these Section 232 tariffs is not impacted by the Supreme Court’s February 2026 decision that struck down the Trump Administration’s broadest tariffs.

Generics, Biosimilars, and Orphan Drugs Excluded from New Tariffs 

For now, the proclamation includes a significant carve-out exempting generic products, including biosimilars, from the new tariff actions, with Annex IV specifically listing items currently exempt from the new pharma tariffs.  The proclamation directs the Secretary of Commerce, however, to reevaluate this generic products exception within one year. 

Further, all drugs designated by the FDA as orphan drugs, which are intended to treat rare diseases affecting fewer than 200,000 people in the US, are exempted from the tariffs.  These include “nuclear medicines; plasma derived therapies; fertility treatments; cell and gene therapies; antibody drug conjugates; medical countermeasures related to chemical, biological, radiological, and nuclear threats” alongside any other products identified by the Secretary of Commerce as (a) being products of a jurisdiction that has a current or forthcoming trade and security framework agreement with the Trump Administration; or (b) which meet an urgent US health need.

Lower Tariff Rates Apply to Pharma Products Subject to Country-Specific Trade Deals

The proclamation also implements reduced tariff rates for countries with which the administration has reached trade deals or trade agreements in principle.  Covered products originating from Japan, EU member countries, South Korea, Switzerland, and Lichtenstein will face 15% tariffs under the terms of such agreements unless a lower rate applies.  Products of the UK will face 10% tariffs, however, the rate applicable to UK-origin products may be reduced to 0% if required by any future agreement with the United States.

MFN and Onshoring Exemptions

The proclamation also provides multiple routes for company-specific exemptions to the pharma tariffs.  These provisions appear intended to pressure pharma companies to take steps towards supporting the president’s domestic drug pricing and manufacturing agendas: 

• Company-Specific Tariff Agreements: Tariff rates and treatment set in company-specific agreements executed in recent months will apply to the imported pharma products of such companies.  Under many of these agreements, companies make commitments on domestic drug pricing and US-based manufacturing in exchange for relief from certain tariffs and, in some circumstances, expedited drug application review by the FDA through the administration’s new National Priority Review Voucher pilot program.  The company-specific tariff agreements listed in Annex II to the proclamation appear distinct from the “onshoring agreements” and Most-Favored-Nation (MFN) pricing agreements discussed below and their tariff-related terms may vary.  
• Potential 20% Tariffs Until 2029: Companies can take advantage of a reduced 20% tariff rate (as opposed to 100%) until January 20, 2029 if they submit an approved “onshoring plan.”  These plans are subject to monitoring and enforcement, including the submission of periodic progress reports, allowing for the US government to re-impose both “prospectively and retroactively” the full 100% tariff in the event of non-compliance with such plans.
• Potential 0% Tariff Until 2029: Companies that have submitted an approved onshoring plan and that have signed MFN pharmaceutical pricing agreements will face a 0% tariff until January 20, 2029.  

Staggered Company-Specific Effective Dates

The new tariffs imposed under the proclamation will go into effect on September 29, 2026, except for the seventeen companies listed in Annex III, which will face an accelerated implementation date of July 31, 2026, after which those companies’ pharma imports will be subject to the tariff rates agreed upon by the Trump Administration.  At least thirteen of the companies facing accelerated implementation have signed company-specific tariff agreements, which suggests that the administration’s staggered effective dates are meant to pressure these companies into complying with or entering into such agreements. 

Are Pharma Tariffs Here to Stay?

These new pharma tariffs under Section 232 tariffs are not within the scope of tariffs struck down by the Supreme Court’s February 2026 decision. Section 232 tariffs have historically been more resilient to judicial and administrative challenges, unlike the now-overruled International Emergency Economic Powers Act (IEEPA) tariffs or the administration’s new tariffs under Section 122 that are currently being challenged in court.  Accordingly, despite ongoing tariff uncertainty, it is expected that pharma companies and importers will continue to evaluate the potential benefits and challenges of pursuing company-specific tariff agreements, MFN pricing agreements, or an approved onshoring plans — all of which have the potential to substantially lower a company’s overall exposure to these new pharma tariffs.