Trade Advisory: Section 232 Tariffs on Patented Pharmaceuticals and Pharmaceutical Ingredients

July 31, 2026

Executive Summary

The United States has implemented new Section 232 tariff measures on certain imported patented pharmaceuticals and pharmaceutical ingredients, citing national security concerns related to pharmaceutical supply chain dependency and domestic manufacturing capacity.

The new measures establish tariff rates based on product type, country of origin, and eligibility for approved domestic manufacturing commitments.

Background

On April 2, 2026, the President issued Proclamation 11020, imposing additional duties on certain imports of patented pharmaceuticals and patented pharmaceutical ingredients, including active pharmaceutical ingredients (APIs) and key starting materials.

The measures take effect:

• July 31, 2026 for products of companies specifically identified in Annex III of the Proclamation.
• September 29, 2026 for products of all other companies.

Beginning July 31, 2026, importers of affected pharmaceutical products are required to comply with CBP reporting requirements associated with the new Section 232 pharmaceutical tariff program, even during periods where no additional duties may yet be payable.

Overview of Tariff Treatment

The Section 232 pharmaceutical program establishes different tariff outcomes depending on the origin of the merchandise and the manufacturer's participation in approved U.S. government programs.

Covered patented pharmaceuticals and associated pharmaceutical ingredients are generally subject to a tariff rate that may reach 100% ad valorem.

European and Asian Strategic Trading Partners: A reduced tariff rate applies to products originating from: European Union member states, Japan, South Korea, Switzerland, and Liechtenstein. These products are generally subject to a 15% tariff rate, unless a lower rate applies under another provision of the proclamation.

United Kingdom: Products originating from the United Kingdom are excluded from tariffs.

Companies with Approved Onshoring Plans: Manufacturers with Commerce-approved plans to increase pharmaceutical production in the United States may qualify for a significantly reduced tariff rate. The reduced rate is intended to encourage pharmaceutical manufacturing investment and supply chain localization within the United States.

Companies with Onshoring and MFN Pricing Agreements: Certain companies that have both approved domestic manufacturing commitments, and Most-Favored-Nation (MFN) pharmaceutical pricing agreements with the U.S. Government may qualify for temporary zero-duty treatment through January 20, 2029.

Products Excluded from Tariffs

Several categories of pharmaceutical products may qualify for duty-free treatment under the proclamation, including orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody-drug conjugates, animal health pharmaceuticals. Eligibility for these exemptions depends on criteria established by the Department of Commerce and other federal agencies.

Generic Pharmaceuticals Remain Exempt

The proclamation specifically excludes generic pharmaceutical products and generic pharmaceutical ingredients from the current Section 232 tariff action.

Free Trade Agreements and Preference Programs

Eligibility for preferential treatment under U.S. free trade agreements or trade preference programs does not eliminate the application of these Section 232 tariffs where applicable.

Foreign Trade Zone (FTZ) Considerations

The proclamation contains important implications for Foreign-Trade Zone operations.

Affected pharmaceutical products admitted into a U.S. FTZ on or after the effective date generally must be admitted in Privileged Foreign Status.

Recommended Actions for Importers

Importers should immediately:

1. Identify whether imported products are patented pharmaceuticals or associated pharmaceutical ingredients.
2. Confirm whether products qualify as generic pharmaceuticals.
3. Evaluate country-of-origin impacts on applicable tariff treatment.
4. Review product eligibility for available exclusions and exemptions.
5. Assess whether existing or planned U.S. manufacturing investments may qualify for reduced tariff treatment.
6. Review drawback opportunities to recover duties.
7. Evaluate FTZ procedures and Privileged Foreign Status requirements.
8. Monitor Commerce Department and CBP guidance for additional implementation requirements.

Disclaimer

This advisory is provided for informational purposes only and does not constitute legal advice. The information is based on publicly available government sources, Presidential Proclamation 11020, and CBP implementation guidance available as of July 31, 2026. Trade measures, tariff rates, exclusions, reporting requirements, and administrative procedures may be modified, clarified, or supplemented through subsequent Federal Register notices, CBP guidance, or other government actions. Importers should consult qualified legal counsel and trade compliance professionals before making decisions based on evolving trade policy developments.

How Crane Trade Consulting Can Help

Crane Trade Consulting can assist with Section 232 pharmaceutical tariff applicability reviews, Country of origin analysis, Supply chain impact assessments, FTZ compliance evaluations, Drawback opportunity reviews, Tariff mitigation strategies, Import compliance support, and Monitoring future CBP and Commerce guidance. For additional consultation on a case-by-case basis, please contact Our Trade Advisors.