The Section 232 pharmaceutical tariff, read from the proclamation

Introduction

On April 2, 2026, President Trump signed Proclamation 11020, invoking Section 232 of the Trade Expansion Act of 1962 to impose tariffs on patented pharmaceuticals and active pharmaceutical ingredients (APIs) entering the United States. It is one of the most consequential trade actions to hit the pharma sector in years.

This guide walks through the proclamation as written: the legal basis, the tariff tiers, the annexes, the effective dates, and what is and isn't covered, including a follow-up announcement on generics you should know about.

What Section 232 Is and Why It Applies Here

Section 232 (19 U.S.C. § 1862) lets the President restrict or tax imports when the Commerce Department finds that those imports threaten national security. It's the same legal tool used for steel and aluminium tariffs in 2018. It is a separate statute from the International Emergency Economic Powers Act (IEEPA), which the Supreme Court struck down in February 2026 for a different set of tariffs. That ruling does not touch Section 232 pharmaceutical tariffs, which remain in force.

The Commerce Department opened its pharmaceutical investigation on April 1, 2025. A year later, the President acted on its findings. Section 232 tariffs are administered through Commerce and the Harmonised Tariff Schedule, not executive emergency powers. Hence, they follow a slower, more procedural path with annexes, company-specific carve-outs, and scheduled review points.

The Commerce Department's National Security Finding

The proclamation states that pharmaceuticals and pharmaceutical ingredients are being imported "in such quantities and under such circumstances" as to threaten national security. The evidence cited includes two figures worth remembering:

• About 53% of patented pharmaceutical products sold in the US are manufactured outside the country.

• Only about 15% of patented APIs, by volume, are produced domestically for the US market.

This import dependence, according to the proclamation, is the underlying justification for the tariff action.

Key Dates from the Proclamation

The Five-Tier Tariff Structure

The proclamation does not set a single flat rate. It builds a tiered system based on country of origin, onshoring commitments, and drug-pricing agreements with HHS.

One technical detail matters for import valuation: where a covered product also carries a non-duty-free Most-Favoured-Nation tariff rate, the Section 232 duty is adjusted. Hence, the combined duty equals 100%, not stacked on top of it. If the MFN rate alone already exceeds 100%, only that rate applies.

What the Annexes Actually Cover

The proclamation works through four annexes, and each one answers a different question:

• Annex I -  lists the covered products by modifying the Harmonised Tariff Schedule (HTSUS). It spans over 130 tariff lines across HTS Chapters 29 and 30, filed under new Chapter 99 headings 9903.04.60 through 9903.04.69.

• Annex II - Ratifies 13 pre-existing company-specific MFN pricing agreements, giving those companies the 0% pathway.

• Annex III - Names the 17 companies whose tariff obligations start earliest, on July 31, 2026.

• Annex IV - Lists specific pharmaceutical chemicals, vitamins, hormones, antibiotics, and preparations that remain at a 0% Section 232 rate "at this time," and are also exempt from the separate import surcharge under Proclamation 11012 of February 20, 2026.

Who Is Hit First: The Annex III Companies

Seventeen large, patent-holding pharmaceutical manufacturers are named directly in Annex III, meaning their July 31, 2026, deadline arrived before everyone else's. The list includes AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, EMD Serono, Eli Lilly, Genentech, Gilead Sciences, GlaxoSmithKline/ViiV Healthcare, Johnson & Johnson, Merck Sharp & Dohme, Novartis, Novo Nordisk, Pfizer, Regeneron, and Sanofi.

Every other pharmaceutical importer, regardless of size, works under the September 29, 2026, deadline.

What's Excluded, For Now

Two categories sit outside the tariff, at least for the moment:

• Generic pharmaceuticals and their associated ingredients are not subject to Section 232 duties under this proclamation.

• Biosimilars are similarly excluded from the current framework.

This exclusion is not permanent. The proclamation directs the Commerce Secretary to report back within one year on whether circumstances justify extending the tariff to generics. Companies with generic or biosimilar portfolios should treat this as a standing item to monitor, not a settled exemption.

Tariffs are pushing pharma companies to bring manufacturing home, see what's driving the API onshoring shift.
→ Read: The Future of Pharma: Onshoring API Manufacturing

The July 2026 Generic Drug Tariff Announcement

On July 22, 2026, President Trump signalled that generics won't stay excluded forever. In a Truth Social post - not a signed proclamation, executive order, or Federal Register notice - he outlined a phased plan:

• 0% tariff on imported generic drugs for two years, starting August 1, 2026

• 100% tariff beginning in August 2028

• 200% tariff starting in 2029

He framed the plan as a way to "reshore" generic drug manufacturing, describing the eventual tariff as a penalty for companies that don't build US plants in time. Tariffs on branded, patented drugs stay unchanged.

This matters legally, and it's worth being precise about: the July 22 announcement is a stated policy intention, not a binding legal instrument. Proclamation 11020 remains the only formal, enforceable Section 232 action on pharmaceuticals, and it still excludes generics and biosimilars. Until a proclamation, executive order, or Commerce rule actually implements the plan Trump described, generic manufacturers are not yet legally obligated to comply with it. That said, since generics account for roughly 90% of US prescriptions and much of that supply comes from India, the direction is clear even before the paperwork is finalised. Treat this as an active planning signal, not background noise.

The Drawback Provision

Unlike some past Section 232 actions, this proclamation explicitly allows duty drawback. Importers who re-export or destroy covered pharmaceuticals or APIs within 5 years of import may recover up to 99% of the duty paid under 19 U.S.C. section 1313. This is a meaningful relief valve for companies with global distribution routing products through the US.

Compliance Checklist

Use this as a starting point for internal review, not a substitute for legal counsel:

• Confirm whether your company appears in Annex III (July 31 deadline) or falls under the general September 29 deadline

• Map your product portfolio against the HTSUS codes in Annex I

• Check Annex IV to see if any of your products already sit at 0%

• Determine your country-of-origin exposure for API and finished-dose imports

• Review whether an MFN pricing agreement with HHS is a realistic near-term path to the 0% tier

• Evaluate the onshoring plan eligibility for the 20% transitional rate

• Assess drawback eligibility if your supply chain re-exports through the US

• Revisit the landed-cost models built before April 2, 2026; they no longer reflect reality

• If you manufacture or import generics, start planning around the 2028–2029 tariff timeline announced on July 22, 2026, even though it isn't yet law

Tariff exposure is just one supply-chain risk companies need to plan around, see the broader resilience strategies pharma is adopting.
→ Read: Pharma Supply Chain: Strategies for a Resilient Future

FAQs

What is the Section 232 pharmaceutical tariff? 

It's a tariff of up to 100% on patented pharmaceuticals and APIs, imposed under Proclamation 11020 for national security reasons tied to import dependence.

When do the pharma tariffs actually start?

July 31, 2026, for the 17 companies named in Annex III, and September 29, 2026, for all other pharmaceutical importers.

Does the tariff cover generic drugs?

Not under the April 2 proclamation, which excludes them. Trump separately announced on July 22, 2026, a future phased tariff on generics starting in 2028, but that plan is not yet a binding legal action.

Did the Supreme Court's tariff ruling affect this proclamation?

No. The Court's February 2026 ruling struck down IEEPA tariffs, not Section 232 actions, so this proclamation remains in effect.

Can companies get a lower tariff rate? 

Yes. Rates drop to 20% with an approved onshoring plan; 15% for the EU, Japan, South Korea, and Switzerland; 10% for the UK; and 0% with a signed MFN pricing agreement with HHS.