US imposes sweeping pharma tariffs under Section 232 order

The Donald Trump administration has enacted a far-reaching tariff regime on pharmaceuticals, converting months of trade threats into binding law under Section 232 of the Trade Expansion Act.

The order introduces a 100 per cent tariff on patented medicines and their active pharmaceutical ingredients, with implementation set for July 31 for larger companies and late September for smaller manufacturers. Generics and biosimilars are temporarily exempt, pending review.

The framework ties tariff exposure less to geography and more to corporate behaviour. Companies securing “most favoured nation” pricing agreements with the US Department of Health and Human Services can reduce tariffs to zero, while those pursuing domestic manufacturing face a transitional 20 per cent rate that rises to 100 per cent by 2030.

The policy is expected to reshape global supply chains rather than trigger a short-term price shock. Industry groups across the development chain, from contract research organisations to manufacturers, face pressure to reassess sourcing, pricing and capacity strategies.

Officials say the measures have already driven hundreds of billions of dollars in pledged US investment, intensifying competition for domestic manufacturing capacity and accelerating a broader shift towards onshoring.

For procurement and operations teams, the challenge is immediate: map exposure across suppliers, reprice contracts ahead of implementation deadlines and secure capacity in a tightening domestic market.