Trump's 100% tariff on patented drug imports under Section 232

On April 2, 2026, President Trump signed a proclamation imposing a 100% ad valorem tariff on imports of patented pharmaceuticals and their active pharmaceutical ingredients under Section 232 of the Trade Expansion Act of 1962. Section 232 allows the president to restrict imports when the Secretary of Commerce determines they threaten national security — an authority historically applied to steel, aluminum, and uranium, but never before to pharmaceuticals.

Commerce Secretary HLHoward Lutnick conducted the Section 232 investigation that provided the legal foundation for the action. Lutnick's probe was one of 12 Section 232 investigations his department launched — the most of any administration in history. The proclamation formally declares U.S. dependence on foreign pharmaceutical supply chains a national security threat requiring presidential action.

The tariff structure is tiered based on company commitments and country of origin. Companies listed in Annex III of the proclamation — 17 firms including AbbVie, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Gilead, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, and Regeneron — face the 100% rate effective July 31, 2026, unless they submit an approved domestic manufacturing plan to the Commerce Department.

Companies with a Secretary of Commerce-approved plan to relocate or expand U.S. pharmaceutical production qualify for a reduced 20% tariff. That 20% rate escalates back to 100% on April 2, 2030, creating a four-year window for domestic factory construction. Manufacturers in the EU, Japan, South Korea, and Switzerland and Liechtenstein face a 15% tariff, while UK manufacturers face a 10% tariff tied to a potential bilateral pharmaceutical pricing agreement.

The national security rationale centers on two findings from Lutnick's investigation: approximately 53% of patented pharmaceutical products sold in the United States are manufactured abroad, and approximately 85% of the active pharmaceutical ingredients used in those products come from foreign suppliers — primarily China and India. The COVID-19 pandemic exposed the vulnerability of these supply chains when international disruptions caused shortages of critical medications.

U.S. Trade Representative JGJamieson Greer said in a statement that 'President Trump is ensuring our trading partners pay their fair share for innovative pharmaceutical products, so that American patients are not shouldering the burden of funding research and development for the next generation of life-saving medicines.' The proclamation directs the Secretaries of Commerce and HHS to pursue negotiations with foreign parties within 90 days and report progress to the president.

Generic drugs, biosimilars, and their associated ingredients are explicitly excluded from the tariffs. The administration's rationale is that generics and biosimilars already compete on price, face thinner margins, and are less subject to the pricing disparities the tariff is designed to correct. The Commerce Secretary was directed to review, within one year, whether future action on generics may be warranted.

The exclusion of generics substantially narrows the tariff's direct consumer impact. Generics account for approximately 90% of prescriptions filled in the United States, though they represent a much smaller share of total drug spending. Patented brand-name drugs — the target of the 100% tariff — account for the majority of pharmaceutical spending despite representing a smaller share of prescriptions.

The impending tariffs spurred approximately $400 billion in domestic investment commitments from U.S. and foreign pharmaceutical companies before the proclamation was signed. Companies including Eli Lilly, Johnson & Johnson, and Novartis announced plans to build or expand U.S. manufacturing facilities in anticipation of the tariff structure. The White House cited these commitments as evidence that the tariff was already achieving its onshoring goal before taking legal effect.

Eli Lilly CEO DRDavid Ricks acknowledged that the tariffs could add significant financial pressure on drugmakers, potentially forcing companies to reduce spending elsewhere — including in research and development. The structure of costs in pharmaceutical manufacturing means higher input tariffs can affect not just profit margins but the capital available for new drug development.

PhRMA president and CEO SUStephen Ubl condemned the tariffs in direct terms: 'Tariffs on cutting-edge medicines will increase costs and could jeopardize billions in U.S. investments announced in the last year. Every dollar spent on tariffs is a dollar that can't be invested in communities across the country.' PhRMA represents the major branded pharmaceutical manufacturers and has consistently opposed government actions it says will reduce investment in new drug development.

JCJohn Crowley, President and CEO of the Biotechnology Innovation Organization, which represents more than 1,000 U.S. biotech companies, said the tariffs would 'raise costs, impede domestic manufacturing, and delay the development of new treatments — all while doing nothing to enhance our national security.' Crowley warned the immediate 100% rate would devastate the 3,000+ small and mid-sized biotech companies that develop more than half of all FDA-approved medicines but lack the capital to build U.S. factories on the administration's timeline. The Information Technology and Innovation Foundation separately called the tariffs the 'wrong prescription for U.S. patients,' finding the complex tiered rate structure creates compliance burdens and that patients will face higher costs before any manufacturing reshoring benefit arrives.

HHS Secretary Robert F. Kennedy Jr. specifically praised the administration's deal with the United Kingdom, saying 'President Trump's agreement with the United Kingdom is another big step toward ending a system that forces Americans to pay more so others can pay less.' Kennedy has made pharmaceutical pricing a central focus of his tenure at HHS, arguing that Americans subsidize drug prices in countries with government-negotiated rates.

The proclamation directs Kennedy's HHS and Lutnick's Commerce Department to jointly pursue negotiations with any parties to address the national security threat from imported pharmaceuticals within 90 days. Companies that agree to both onshoring production commitments and Most Favored Nation pricing agreements — charging the U.S. no more than their lowest price in any other country — can earn 3-year waivers from the Section 232 tariffs entirely.

Section 232 of the Trade Expansion Act of 1962 has rarely been invoked in American history — it was largely dormant for decades before the Trump administration began using it aggressively. The first Trump administration used Section 232 for steel and aluminum tariffs in 2018, which survived Supreme Court review. Courts have generally given broad deference to presidential determinations under Section 232, treating them as exercises of core executive authority over national security.

Legal challenges to pharmaceutical tariffs are anticipated from affected companies and potentially from trading partners through World Trade Organization dispute mechanisms. The European Union, Japan, and other allies with lower tariff rates under the proclamation have signaled objections to the use of national security framing for what they characterize as protectionist trade policy. The WTO dispute process typically takes several years and has limited enforcement mechanisms against the United States.