President Trump signed an Executive Order today, April 2, titled Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States, which imposes a new 100% Section 232 tariff on patented pharmaceutical products and ingredients, to be implemented in 120 days for large companies and 180 days for smaller companies.
Tariff Exceptions and Reductions
- 15% Section 232 Tariff: Applies to pharmaceutical products originating from the European Union, Japan, Korea, Switzerland and Liechtenstein.
- Lower Section 232 Tariff: Applies to products from the United Kingdom, as stipulated by the recent UK pharmaceutical agreement.
- 0% Section 232 Tariff (through Jan. 20, 2029): Companies that enter into both Most Favored Nation (MFN) pricing agreements with the Health and Human Services (HHS) Department and onshoring agreements with the Commerce Department qualify for a 0% tariff.
- 20% Section 232 Tariff: Companies that only enter into onshoring agreements with the Department of Commerce will face a 20% tariff.
According to the accompanying White House Fact Sheet: President Donald J. Trump Bolsters National Security and Strengthens U.S. Supply Chains by Imposing Tariffs on Patented Pharmaceutical Products, the Commerce Department and Health and Human Services (HHS) are tasked with providing the necessary processes for companies to engage in these onshoring and MFN pricing deals with the United States to provide pathways to lowered tariffs.
As always, we encourage you to read the executive order and fact sheet in their entirety to have a full understanding of how these changes might affect your business.
We will continue to keep you informed about any changes, and please don’t hesitate to reach out to us with any questions.
