On September 29, 2026, the second and final phase of the Trump administration's tariffs on imported brand-name drugs took effect. Imports of patented medicines and their key ingredients now face a default tariff of 100% under Section 232 of the Trade Expansion Act of 1962, a national security trade law [1][2]. In practice, though, a web of company agreements, product exemptions and country-specific caps means relatively few products are likely to pay the full rate.

How we got here

President Trump has threatened pharmaceutical tariffs since 2025, at times floating rates as high as 200%. After a Commerce Department investigation concluded that U.S. dependence on imported patented drugs threatens national security, he signed a proclamation on April 2, 2026, exactly one year after the "Liberation Day" tariffs [3][4]. The pharmaceutical tariffs rest on different legal ground than the broad import tariffs the Supreme Court struck down in February 2026, which had relied on the International Emergency Economic Powers Act. Section 232 has been used for decades on steel, aluminum and other goods, and it was not affected by that ruling [1][5]. The proclamation set two start dates. Tariffs began July 31, 2026, for 17 large drugmakers named in an annex to the proclamation, and on September 29 for all other companies [2][4].

Tiers of tariffs

The proclamation creates several rates depending on what a company has agreed to with the government [1][2][6]: • 100% applies by default to patented drugs, their active pharmaceutical ingredients (APIs) and certain raw materials from companies without an agreement.

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20% applies to companies with a Commerce Department-approved plan to move manufacturing to the United States. That reduced rate is scheduled to rise back to 100% on April 2, 2030, giving companies a window to build U.S. plants.

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0% applies, through January 20, 2029, to companies that have both an approved onshoring plan and a "most favored nation" pricing agreement with the Department of Health and Human Services. Thirteen companies that reached such agreements between December 2025 and March 2026 are listed in the proclamation [6].

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Lower caps apply to products from some trading partners. Under a U.S.-U.K. pharmaceutical arrangement, for example, a 10% rate applies to qualifying British products [7]. U.S. Customs and Border Protection is responsible for collecting the tariffs, and importers must determine which tier applies to each shipment. Where a product is subject to both a Section 232 tariff and an ordinary customs duty, the combined rate is capped at the Section 232 rate, and when more than one Section 232 rate could apply, the lowest one governs [7].

What's exempt

Generic drugs and biosimilars, the lower-cost copies of brand-name medicines, are not subject to the tariffs at this time, though the administration has said it will reassess generics within a year [2][7]. That exemption matters because generics account for the large majority of prescriptions filled in the United States. U.S.-made products are excluded, and an annex lists 526 additional product classifications that are exempt [8].

The administration's case

The White House argues that the tariffs address a genuine vulnerability. Much of the world's supply of drug ingredients is produced in other countries, and supply disruptions during the COVID-19 pandemic exposed how dependent the United States is on foreign factories. The administration has also used the tariffs as leverage in its push for lower prices: companies can avoid them by agreeing to sell medicines to Americans at prices closer to what other wealthy nations pay. According to an administration fact sheet, the impending tariffs had already generated roughly $400 billion in new pharmaceutical investment commitments in the United States [4][7]. Companies including Pfizer and AstraZeneca secured multi-year exemptions through pricing agreements, while Eli Lilly, Johnson & Johnson and Merck announced major investments to expand U.S. operations, according to Bloomberg reporting summarized by Business Today [9].

The concerns

Patient advocates have warned that tariffs could raise costs or disrupt access, particularly for drugs from companies that have not reached agreements [1]. Because tariffs are paid by importers, any costs could flow through to wholesalers, pharmacies, insurers and eventually patients. Supply chain analysts noted ahead of the September deadline that a significant volume of branded drug shipments remained exposed to the full 100% rate [10]. For now, however, some benefits consultants expect limited near-term effects. Managed Healthcare Executive reported that the consulting firm Gallagher did not expect a cost impact for the 2026-2027 health plan year [1]. Many of the largest drugmakers had already signed agreements, and building new factories takes years, so the true test of whether the policy brings manufacturing home will come later in the decade.

What comes next

Several decisions still lie ahead. The administration must decide within a year whether to impose tariffs on generic drugs, which would affect the low-cost medicines most Americans take every day [2][7]. The proclamation also allows the Commerce Secretary to raise tariff rates on companies that fail to keep their onshoring commitments, including retroactively in cases of fraud or deliberate misrepresentation [3]. Trade analysts are also watching new Section 232 investigations into personal protective equipment, medical consumables and robotics, which could extend tariffs further into the health care supply chain [5]. Importers that bring in covered drugs and later re-export them may be able to recover tariffs through a process called duty drawback, an option rarely available under Section 232 [5].

Why it matters

The tariffs represent one of the most aggressive uses of trade policy in the history of the U.S. drug industry. They combine two goals that do not always point in the same direction: moving production to the United States, which can raise costs in the short term, and lowering prices for American patients. The administration is betting that tying the two together, through deals that trade tariff relief for price cuts and factory investments, will deliver both. Whether that bet pays off will become clearer as reduced tariff rates expire in 2029 and 2030 and as the government decides whether to extend tariffs to generic medicines.

Sources

  • 1. "Tariffs on patented drugs now apply to all branded drugmakers," Managed Healthcare Executive, September 29, 2026. https://www.managedhealthcareexecutive.com/view/tariffs-on-patented-drugs-now-a pply-to-all-branded-drugmakers
  • 2. "Trump Administration Announces Tariffs on Imported Patented Medication and Pharmaceutical Ingredients under Section 232," Mayer Brown, April 6, 2026. https://www.jdsupra.com/legalnews/trump-administration-announces-tariffs-1018942/
  • 3. "Executive Order Imposing Section 232 Tariffs on Pharmaceuticals and Pharmaceutical Ingredients," JD Supra, April 2026. https://www.jdsupra.com/legalnews/executive-order-imposing-section-232-2316448/
  • 4. "Trump Administration Expands Section 232 Tariffs to Patented Pharmaceuticals and APIs," Polsinelli, April
  • 2026. https://www.polsinelli.com/publications/trump-administration-expands-section-232-tariffs-to-patente d-pharmaceuticals-and-apis
  • 5. "100% Duties, Two Deadlines: Section 232 Pharmaceutical Tariffs Take Effect July 31, 2026," The Mallory Group, 2026. https://www.mallorygroup.com/blog-posts/100-duties-two-deadlines-section-232-pharmaceuti cal-tariffs-take-effect-july-31-2026
  • 6. "100% on Brand: US Imposes New Tariffs and Key Exemptions on Patented Pharmaceuticals," Ropes & Gray, April 2026. https://www.ropesgray.com/en/insights/alerts/2026/04/100-on-brand-us-imposes-new-tari ffs-and-key-exemptions-on-patented-pharmaceuticals
  • 7. "U.S. Imposes 100% Section 232 Tariffs on Patented Pharmaceuticals and Ingredients," GHY International, April 2, 2026. https://www.ghy.com/trade-compliance/us-imposes-100-section-232-tariffs-on-patented-phar maceuticals-and-ingredients/
  • 8. "Trump Administration Announces Section 232 Tariffs on Patented Pharmaceuticals and Ingredients," Covington & Burling, April 2026. https://www.cov.com/en/news-and-insights/insights/2026/04/trump-admi nistration-announces-section-232-tariffs-on-patented-pharmaceuticals-and-ingredients
  • 9. "Trump administration to announce tariffs on certain drugmakers," Business Today, April 2, 2026. https://w ww.businesstoday.in/world/us/story/trump-administration-to-announce-tariffs-on-certain-drugmakers-5236 53-2026-04-02
  • 10. "Pharma Tariff Exposure: What's at Stake as Implementation Approaches," Exiger, June 23, 2026. https://www.exiger.com/perspectives/pharma-tariff-exposure-whats-at-stake-as-implementation-approaches/ Information in this article is current as of October 9, 2026. Bracketed numbers refer to the sources listed above.

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