On April 2, 2026, the President of the United States signed a Presidential Proclamation introducing significant tariffs on imports of patented pharmaceutical articles and their ingredients into the United States.
The tariff measures set forth therein become effective at 12:01 a.m. Eastern time on July 31, 2026 for pharmaceutical articles manufactured by the companies listed in Annex III of the Proclamation, and as of September 29, 2026, for all other pharmaceutical articles, and shall remain in effect unless expressly reduced, modified, or terminated.
The measure, which is based on Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862), responds to the findings of the Secretary of Commerce that patented pharmaceutical articles and related active pharmaceutical ingredients (APIs), including key starting materials, are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.
Products Covered, Tariff Rates, and Exemptions
The products covered by this measure are patented pharmaceutical articles — pharmaceutical articles that are subject to a valid, unexpired U.S. patent and are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“Orange Book”) or in the FDA’s Lists of Licensed Biological Products (“Purple Book”), including the related active pharmaceutical ingredients and key starting materials — and their associated ingredients (i.e., active pharmaceutical ingredients and key starting materials) as set forth in Annex I of the Proclamation (hereinafter “Pharmaceutical Products”).
Generic pharmaceutical articles (i.e., FDA-approved pharmaceutical articles, and associated ingredients, that are not subject to a valid, unexpired U.S. patent and are off exclusivity) and their ingredients are excluded from this measure.
Specifically, the importation into the United States of Pharmaceutical Products shall be subject to a 100% ad valorem duty, subject to the following reductions/exemptions:
- a 20% ad valorem duty shall apply for four years to the importation of Pharmaceutical Products manufactured by companies that have adopted an onshoring plan approved by the Secretary of Commerce. As of April 2, 2030, a 100% duty shall also apply to Pharmaceutical Products manufactured by such companies and imported into the United States.
- a 15% ad valorem duty shall apply to the importation of Pharmaceutical Products that are the product of Japan, of a member country of the European Union, of South Korea, of Switzerland, or of Liechtenstein (pursuant to the trade agreements concluded in recent months with these jurisdictions).
- a 10% ad valorem duty shall apply to the importation of Pharmaceutical Products that are the product of the United Kingdom (pursuant to the trade agreement concluded in recent months with the UK).
The new duty shall not apply:
a) to the importation of Pharmaceutical Products classified under the HTSUS provisions set forth in Annex IV of the Proclamation;
b) to the importation of Pharmaceutical Products manufactured by the companies listed in Annex II of the Proclamation, which have entered into specific company-specific agreements (MFN pharmaceutical pricing agreements);
c) to the importation of certain categories of Pharmaceutical Products (e.g., drugs designated as orphan pursuant to the Orphan Drug Act, nuclear medicines, plasma-derived therapies) for which the Secretary of Commerce, the United States Trade Representative, and the Secretary of Health and Human Services shall determine (by publication in the Federal Register) that: (i) the products are the product of a jurisdiction that has a current or forthcoming trade and security framework, or (ii) the products meet an urgent U.S. health need;
d) until January 29, 2029, to the importation of Pharmaceutical Products manufactured by companies that have an approved onshoring plan and that have entered into, or are in the process of entering into, a Most-Favored-Nation pharmaceutical pricing agreement with the Secretary of Health and Human Services.
Action Items for Industry Operators
In light of the new tariff measures, companies in the sector that import Pharmaceutical Products into the United States of America should:
- Verify the tariff classification of goods to assess the applicability of the new duty or any available exemptions;
- Prepare appropriate documentation sets to demonstrate to U.S. Customs and Border Protection the entitlement to reductions or exemptions;
- Review intercompany transfer pricing policies (in the case of intercompany transactions) to assess the possibility of potential reductions in the selling price of Pharmaceutical Products;
- Consider the adoption of an onshoring plan to be submitted to the Secretary of Commerce;
- Assess the possibility of accessing duty drawback programs.
Our professionals specializing in customs and international trade law can assist companies, including through our network of U.S. partner firms, in clarifying any questions regarding the new tariff measures.
For further information, please contact:
Gaetano Salvioli, Partner, Bird & Bird
gaetano.salvioli@twobirds.com
