Trump’s Tariffs Are Off — Or Are They? What Pharma Does Next

• The Supreme Court has voided Trump’s IEEPA tariffs — but the White House has already pivoted to alternative legal authorities
• Section 232 remains a live threat; drugmakers need to stay in scenario-planning mode

On February 20, the U.S. Supreme Court delivered one of the most consequential trade rulings in decades. In a 6–3 decision, the justices held that President Trump had no authority under the International Emergency Economic Powers Act (IEEPA) to impose broad import tariffs — immediately nullifying duties that had threatened pharmaceutical supply chains.

For an industry that had spent the better part of a year hedging against potential 100% tariffs on branded medicines, it should have felt like a moment to exhale. It wasn’t.

How We Got Here

Throughout 2025, the Trump administration used tariff threats as a blunt instrument — extracting pricing concessions while pressuring companies to reshore manufacturing. The strategy produced results. Nine major companies — Pfizer, Novartis, Amgen, Sanofi, GSK, Merck, BMS, Gilead and Roche/Genentech — agreed to significant discounts for U.S. patients in exchange for three-year tariff exemptions. Bernstein analysts noted the deals allowed pharma leaders to “minimise any step-change in company economics” — trading headline price cuts for financial stability.

The pressure landed unevenly. Generic manufacturers largely won explicit carve-outs. Branded pharma bore the brunt — facing dual pressure from pricing concessions and supply-chain tariffs simultaneously.

Collectively, the industry responded with a wave of U.S. investment commitments now estimated at around $370 billion, although how much of that was truly new or repackaging and extensions of existing plans is widely disputed. Companies also front-loaded inventory into American warehouses. AbbVie executives reported they were “fairly insulated” from tariff pain as a result.

Has Anything Actually Changed?

The Court’s decision invalidated the IEEPA mechanism — but within hours, Trump signed executive orders invoking Section 122 of the Trade Act, implementing a 10% global tariff for up to 150 days, with pharmaceuticals explicitly exempt. Fresh investigations under Section 301 (unfair trade practices) and Section 232 (national security) are already underway. Trump previously floated 100% tariffs on branded medicines under Section 232 — and unlike IEEPA, that authority wasn’t touched by the Court’s ruling.

Lindsay Greenleaf, former HHS adviser at ADVI Health, is direct: “The Trump administration may now have new motivation to move forward with Section 232 — to compensate for today’s loss in court.”

Treasury Secretary Scott Bessent has confirmed the administration intends to “get back to the same tariff level in a less direct and more convoluted manner.” The mechanism has changed. The intent hasn’t.

So for pharma, the honest answer to whether anything has changed is: not yet. The tariff threat hasn’t gone away. It’s changed address. And until there is genuine clarity on Section 232 and other pending actions, the industry remains in a state of suspended uncertainty.

Kristin Pothier of KPMG puts it plainly:

“Today’s ruling leaves key questions around tariff exposure and trade uncertainties. Now is the time to pressure-test sourcing models and accelerate AI-driven forecasting. Resilience and disciplined scenario planning will be essential as trade dynamics continue to shift.”

The Problem With On/Off Trade Policy in a Five-Year Industry

This uncertainty carries a cost that’s specific to pharma: manufacturing decisions don’t operate on a political cycle. Building a new API facility, qualifying a new supplier, or shifting production to a different geography can take five years or more — and that’s before regulatory approval.

It’s a mismatch that’s already showing up in how external manufacturing leaders are responding. Many have adopted what participants in recent industry discussions described as a “freeze position” — avoiding bold decisions whilst hoping for policy clarity.

“It takes four years to set up a new API supplier, eight years for regulatory approval — by which point policy will have changed again,” noted one external manufacturing executive. Another was more blunt:

“Our approach is to wait and see and hope it will go away. We won’t make any bold decisions.”

The problem is that waiting is itself a decision. The companies best placed to navigate this environment are those building for resilience rather than optimisation — investing in U.S. capacity because supply security demands it, not because a tariff forces them to. That logic holds regardless of what the policy does next.

What Drug Makers Should Do Now

Treat Section 232 as the threat that didn’t go away. Trump has previously floated tariffs of up to 100% on branded medicines under this authority — and unlike IEEPA, the Court’s ruling left it untouched. Stress-test your supply chain against that scenario.

Don’t assume MFN deals are irrelevant. Companies have already delivered on their commitments and would face significant political risk walking them back. Treat these as live obligations, not relics of a crisis that’s passed.

Invest for the long term, not the current tariff rate. Supply chain strategy cannot be hostage to the policy cycle. With manufacturing decisions taking five or more years to execute, investments justified by supply security and geographic resilience will hold their value regardless of what Section 232 produces.

Plan for uncertainty, not a specific outcome. As trade lawyer Steve Orava puts it:

“Whether you’re in favour of the tariffs or against them, there’s a unified view that getting some certainty in terms of tariff levels is what is most helpful to drive business and investment decisions.”

That certainty hasn’t arrived. Scenario planning across a range of outcomes is now a core business function.

The Bottom Line

The ruling is a meaningful legal check — but it resolves a legal question without resolving the underlying policy uncertainty. For an industry where the gap between a strategic decision and a commissioned facility can span multiple presidencies, that matters. The question drug manufacturers are really grappling with isn’t whether today’s tariffs are on or off — it’s whether they can build supply chains resilient enough to outlast whichever policy comes next.

The work continues.