- From today, patented drugs, APIs, and key starting materials associated with companies outside the 17-company Annex III list face a default 100% total tariff rate under Proclamation 11020.
- A Commerce notice issued last week says qualifying specialty drugs avoid the additional Section 232 tariff only with the right country of origin or an approved “urgent U.S.
Section 232 tariffs on patented medicines expand to the rest of the industry today. As of 12:01 a.m. Eastern time, covered patented drugs, their APIs and key starting materials associated with companies not named in Annex III of President Trump’s Proclamation 11020 face a default 100% total tariff rate. The 17 large drugmakers on that list have been covered since July 31.
The 100% figure includes the product’s ordinary U.S. customs duty rather than being added on top of it. In customs terminology, the normal “Column 1” duty and the additional Section 232 duty together bring the applicable tariff to 100%.
Life Science Daily News (LSDN) described the group coming into scope today as mid-sized and smaller manufacturers, importers and distributors, many of which hold no company-specific agreement with Commerce. The tariffs apply to patented pharmaceutical articles meeting the proclamation’s definition, which includes listing in the FDA’s Orange Book or Purple Book, as well as associated APIs and key starting materials. According to the proclamation, generics, biosimilars, and U.S.-origin products are not covered “at this time.”
The proclamation sets out several tiers. Where more than one treatment applies, the lowest applicable rate governs.
| Who / what | Section 232 treatment |
|---|---|
| Default: covered patented products | 100% total tariff rate |
| Commerce-approved onshoring plan | Ordinary customs duty + 20% Section 232 tariff, rising to +100% on April 2, 2030 |
| Onshoring plan plus HHS Most-Favored-Nation (MFN) pricing deal | No additional Section 232 tariff until January 20, 2029 |
| Products of the EU, Japan, South Korea, Switzerland/Liechtenstein | 15% total tariff rate |
| Products of the UK | No additional Section 232 tariff |
| Qualifying specialty products (orphan, cell and gene, ADCs, plasma-derived, others) | No additional Section 232 tariff, subject to conditions |
Fewer imports may pay the headline rate than it suggests. The White House reported that 26 manufacturers representing about 89% of the branded market had signed MFN pricing agreements by August 31. LSDN cautioned that Commerce does not fully disclose which firms qualify for reduced rates.
A Commerce Department notice published days before the deadline narrowed the specialty-drug carve-out. According to a September 25 client alert by Allison Raley of law firm Arnall Golden Gregory, a qualifying specialty product avoids the additional Section 232 tariff only if it meets one of two conditions.
The first is country of origin in one of 19 jurisdictions with a current or forthcoming U.S. trade and security framework. The list includes the EU, UK, Japan, South Korea, India and Taiwan; China is not on it. The second is approval of an “urgent U.S. health need” request, which must be filed product by product. Inbound Logistics noted that companies relying on this second route had almost no time to secure a decision before today.
The notice also creates a new exemption from the additional Section 232 tariff for covered products imported solely for clinical trials, R&D or other non-commercial use. It also confirms that excipients and inactive ingredients fall outside the definition of pharmaceutical articles covered by the tariff regime, according to the Arnall Golden Gregory alert.
Beyond the rate table
The table above settles the arithmetic. It leaves the harder questions open. A US-based biotech may have a drug substance or finished product made overseas by a CDMO and imported for the American market. The tariff treatment follows the product, and the company’s headquarters plays no part.
Customs origin shows only part of the supply chain
The tariff gives sponsors an incentive to examine where each manufacturing step takes place. The origin assigned to an imported article maps only its final stage and leaves its upstream dependencies out.
A recent Chemistry Today contribution illustrates this with a hypothetical route. A key starting material is made in China, an API is manufactured in Ireland, and the finished medicine is formulated in the US. Under the assumed customs origin and other conditions, the imported API could receive the EU rate while the supply chain still depends on the Chinese starting material. A favorable tariff position leaves that supply risk in place.
For external manufacturing teams, changing the route takes more than a purchasing decision. Moving API production can mean transferring a process, controlling a new impurity profile, qualifying a facility and filing regulated post-approval changes. Analysts have reported that large stainless steel facilities are seeing better utilization and sponsor interest as tariff risk and possible repatriation from Asia reshape sourcing. Sponsors weighing a US move are competing for capacity that other companies are also reserving. Tariff planning, technical transfer and regulatory planning need to run together.
What remains unsettled
Product-level treatment. Public announcements of company pricing or US investment deals rarely reveal the terms that apply to every product and shipment. Importers still need to establish patent status, tariff classification, customs origin, intended use and the scope of any company agreement.
Industry opposition. PhRMA president Stephen Ubl said the US remains the best place to discover and manufacture affordable, lifesaving medicines, and that “Tariffs will undermine this important goal.” Biocom, the life science membership association, warned that tariffs on pharmaceutical products and inputs will still cause significant unintended consequences for American patients, even with exemptions in place. Both statements date from the April proclamation. Not every observer expects heavy damage. One analyst told BioPharma Dive that the wide carveouts leave the overall threat to the sector low.
Generics. The proclamation requires Commerce to revisit within a year whether action is needed on generic imports. In a CNBC interview, Sandoz CEO Richard Saynor warned of the consequences if future tariffs reach low-margin generic medicines: “Patients pay the tariff.” He said manufacturers might have to raise prices or stop supplying products they cannot sell profitably. His warning addresses a possible future measure. No tariff on generics takes effect today.
Four questions for every product
Sponsors should ask these questions of each product that crosses the US border:
- Stage: At what stage of manufacture does it enter the US?
- Origin: Which country does customs assign as its origin?
- Use: Is it destined for commercial supply or for clinical and research use?
- Exposure: Which suppliers and materials sit upstream?
The first three answers set the immediate customs position. The fourth shows whether the response to the tariff also makes the supply chain more resilient.
How are pharma and biotech responding? Views from ExM Leaders
At our most recent External Manufacturing Leaders events, outsourcing executives in Europe and the United States were grappling with this issues from opposite sides of the Atlantic. The quotes below are unattributed, and the same themes recur in both cities.
Europe: ExM Leaders Basel
Time is the first obstacle. Tariff regimes turn over faster than a supply chain can be rebuilt, and participants said so directly:
“It takes four years to set up a new API supplier, eight years for regulatory approval, by which point policy will have changed again.”
That gap shapes which products move at all. Some participants are still evaluating, while others are already executing a plan, and the dividing line often runs between products inside one company’s portfolio. One leader explained the logic:
“If it’s a new launch there’s an opportunity to change supplier to a different region. For existing products we are trying not to change too much. If I have an established supplier I don’t want to change, as tariffs might change after the midterm elections or in 2028. If we were to change suppliers we would have to do product registration again and it would open a whole Pandora’s box. Tech transfers are very costly.”
Waiting has its own price. A leader at a company that manufactures in Europe and sells mainly in the US said scenario planning has grown heavy enough to slow decisions:
“It impacts every decision we make.We have to assess everything. Which legal entity we are using, the tax implications, customs, manufacturing costs.”
United States External Manufacturing view
External Manufacturing Leaders in Boston earlier this year shared their views. A biotech executive described how early reliance on Chinese suppliers turns into a problem at scale:
“When we were at early stage, we used Chinese suppliers. As we scale, tariffs and how to plan for success has become our number one challenge. We’re less concerned about the BIOSECURE Act now – it’s all about tariffs.”
A senior leader argued for distance from the daily headlines:
“There are a lot of valid concerns, but also a lot of noise and clutter. Administrations come and go. In pharma we need a much longer view – building resilience that will stand the test of time.”
That long view collides with pressure from the boardroom. External manufacturing leaders are explaining to their executives why reshoring is harder than it sounds:
“They may want work to be done in the US, but it’s tricky depending on the product – it could have to be in Europe, India, or with Chinese suppliers.”
Capacity sets the hardest limit. On sterile fill-finish, participants said the space to reshore into does not exist:
“There’s no capacity available. It makes it really hard to build resiliency. We’re booking 18 months ahead of time and it’s still hard to steer.”
Where the policy debate goes next
Basel and Boston reached the same conclusion. Tariff policy moves faster than a supply chain can, so sponsors are making product-by-product decisions and hedging against the next change of direction.
Those bets are only as good as the read on where policy goes next. A new API supplier that takes four years to qualify has to outlast at least one more administration, and a fill-finish slot booked 18 months out has to make sense under rules nobody has written yet. The sponsors who plan well will separate the policy signal from the noise and build networks that hold up under several outcomes.
That is the agenda at CDMO Live Americas, October 20-21 in Boston. Gil Roth of PBOA and Marta Wozinska of the Brookings Institution and Eric Twum of the FDA join sponsors and manufacturing leaders to examine the latest policy developments and what they mean for manufacturing network strategy.
Sign up to the free weekly newsletter for all the latest news, resources and podcasts in pharma manufacturing. 
