New Section 232 action imposes up to 100% ad valorem duties via HTSUS Ch.99 on patented pharmaceuticals and APIs, with complex exemptions and phased rates from July 31, 2026.

REGULATORY BRIEFING – SECTION 232 TARIFFS ON PHARMACEUTICALS AND PHARMACEUTICAL INGREDIENTS

1. What changed

• The President has imposed Section 232 tariffs on imports of patented pharmaceuticals and associated pharmaceutical ingredients (including APIs and key starting materials) into the United States.
• New HTSUS Chapter 99 provisions (9903.04.60–9903.04.69) are created via U.S. note 40 to subchapter III of chapter 99.
• Patented pharmaceuticals and their ingredients in specified HTSUS headings will generally face a 100% ad valorem duty, with reduced or zero rates for certain countries, companies with approved onshoring plans, and companies with MFN pricing/onshoring agreements.
• Generic pharmaceuticals and their ingredients are explicitly excluded from Section 232 tariffs at this time.
• Certain HTSUS codes are carved out with a Section 232 rate of zero and are also exempt from the separate temporary import surcharge under Proclamation 11012.

Source/Annex PDF: https://www.whitehouse.gov/wp-content/uploads/2026/04/Pharmaceuticals-Imports-ANNEXES-I-II-III-IV.pdf

2. Affected products

2.1 Scope of covered HTSUS provisions (subject to new U.S. note 40)

The new U.S. note 40(c) lists the HTSUS provisions whose articles may be subject to the new Chapter 99 headings. These include numerous chemical and pharmaceutical headings, notably:

• APIs and intermediates: e.g., 2918.99.3000, 2921.49.3800, 2922.19.0900, 2922.29.2700, 2922.49.2600, 2930.90.9235, 2933.19.3500, 2933.59.2100, 2933.99.9000, 2934.30.2300, 2934.99.3000, 2937.11.0000, 2937.90.9000, 2938.90.0000, 2941.10.5000, 2941.90.5000, 2942.00.0500, etc.
• Finished dosage form pharmaceuticals: extensive coverage in chapter 30, including:

– 3002.12.0040, 3002.13.0010/0090, 3002.14.0010/0090, 3002.15.0011/0091, 3002.41.0000, 3002.42.0000, 3002.49.0050, 3002.51.0000, 3002.59.0000, 3002.90.1000, 3002.90.5220/5250

– 3003.20.0000, 3003.31.0000, 3003.39.1000/5000, 3003.49.0000, 3003.90.0120/0140/0180/0190

– 3004.10.1010, 3004.10.5010, 3004.20.0010/0083, 3004.31.0000, 3004.32.0060, 3004.39.0010/0055, 3004.41.0000, 3004.49.0005/0010/0020/0030/0040/0050/0060/0070

– 3004.50.5005, 3004.90.1000, and a long list of 3004.90.92xx subheadings (3004.90.9201, 9206, 9208, 9210, 9211, 9215, 9216, 9225, 9236, 9243, 9246, 9249, 9251, 9252, 9253, 9260, 9263, 9267, 9268, 9270, 9271, 9273, 9276).

Only articles that meet the definition of “pharmaceutical articles” in U.S. note 40(c)(i) are subject to the patented/generic distinctions and related Chapter 99 headings.

2.2 Key definitions

Per U.S. note 40:

• “Pharmaceutical articles” (40(c)(i))

– Imported articles classifiable in the listed HTSUS provisions that are:

• Pharmaceutical products; or
• Ingredients (APIs and key starting materials) used to make pharmaceutical products.

• “Patented pharmaceutical articles” (40(c)(ii))

– Pharmaceutical articles that:

• Are subject to a valid, unexpired U.S. patent; and
• Are listed in FDA’s Orange Book (Approved Drug Products with Therapeutic Equivalence Evaluations) or FDA’s Purple Book (Lists of Licensed Biological Products); and
• Include ingredients (APIs and key starting materials) for such patented products.

• “Generic pharmaceutical articles” (40(c)(iii))

– FDA‑approved pharmaceutical articles and associated ingredients that are not subject to a valid, unexpired U.S. patent and are off exclusivity.

– Includes APIs or components used in drug products or biosimilar biological products approved under a “qualifying application,” i.e.:

(a) ANDA under FDCA 505(j);

(b) NDA under 505(b)(2) deemed therapeutically equivalent to a listed drug;

(c) Biosimilar application under PHSA 351(k);

(d) Authorized generics/authorized biological products as defined in FDCA 505(t) and 42 U.S.C. 1320f‑1(e)(2)(B)(ii), when imported by a generic or biosimilar manufacturer.

2.3 Products explicitly excluded from Section 232 tariffs (zero rate)

• Generic pharmaceutical articles: heading 9903.04.67 applies, but with no additional duty (rate is “the duty provided in the applicable subheading”).
• U.S.-origin finished dosage form products: heading 9903.04.68 applies to pharmaceutical products with an API packaged in dosage form that is a product of the United States; no additional duty.
• Non‑pharmaceutical articles in the listed HTSUS provisions: heading 9903.04.69 applies to entries classifiable in the listed HTSUS codes but not meeting the pharmaceutical article definitions; no additional duty.
• Annex IV HTSUS codes: listed codes are subject to the Section 232 action but with a tariff rate of zero and are also exempt from the separate temporary import surcharge under Proclamation 11012.

3. Rate changes and tariff structure

3.1 Baseline Section 232 duty rates

• General rule for patented pharmaceutical articles (heading 9903.04.60)

– Additional duty: 100% ad valorem.

– Mechanism: For articles where the Column 1 general rate is less than 100%, the sum of Column 1 + additional duty = 100%. If Column 1 > 100%, no additional duty is due under 9903.04.60.

• Country‑specific reduced rates (heading 9903.04.62)

– Applies to patented pharmaceutical articles that are products of:

• Japan
• European Union member countries
• Republic of Korea
• Switzerland
• Liechtenstein

– Additional duty: 15% ad valorem.

– Same cap logic: if Column 1 < 15%, Column 1 + additional = 15%; if Column 1 > 15%, no additional duty.

• United Kingdom products (heading 9903.04.63)

– Patented pharmaceutical articles that are products of the UK: duty = Column 1 rate + 10%.

– Future reduction to zero possible under a U.S.–UK pharmaceutical pricing agreement; the Secretary will publish a Federal Register notice if the rate is reduced to zero.

3.2 Company‑specific onshoring and MFN pricing treatment

• Onshoring plan – reduced rate (heading 9903.04.64)

– Applies to patented pharmaceutical articles imported for companies with an onshoring plan approved by the Secretary of Commerce.

– Additional duty: Column 1 rate + 20% (until later change – see 3.4).

– The Secretary will establish criteria and process via Federal Register notice and will notify CBP of qualifying companies.

• Onshoring + MFN pricing – zero rate (heading 9903.04.65)

– Applies to pharmaceutical articles for companies that:

• Have a qualifying onshoring plan; and
• Have entered into a Most‑Favored‑Nation pharmaceutical pricing agreement with HHS.

– Additional duty: 0% (i.e., only the underlying HTSUS Column 1 rate applies).

– This zero‑tariff treatment is available until 12:01 a.m. Eastern time on January 20, 2029, after which heading 9903.04.65 is terminated and deleted.

• Specialty/orphan and certain animal health products – zero rate (heading 9903.04.66)

– Applies to drugs and associated ingredients where all approved indications are designated as orphan under the Orphan Drug Act; nuclear medicines; plasma‑derived therapies; fertility treatments; cell and gene therapies; antibody drug conjugates; medical countermeasures for CBRN threats; other specialty pharmaceuticals identified by the Secretary; and animal health pharmaceuticals.

– Conditions: must be products of a jurisdiction with a current or forthcoming trade and security framework agreement, or must meet an urgent U.S. health need, as determined by the Secretary (in consultation with USTR and HHS).

– Additional duty: 0% (only underlying HTSUS rate applies).

3.3 Transitional and special provisions

• Early‑period treatment (heading 9903.04.61)

– Applies to patented pharmaceutical articles imported for companies identified by the Secretary and imported before 12:01 a.m. Eastern time on September 29, 2026.

– Rate: only the duty provided in the applicable HTSUS subheading (no additional Section 232 duty).

– The Secretary will notify CBP of all such companies.

• Multiple rates – lowest applies

– If a product is subject to more than one rate of duty under this proclamation, the lowest applicable rate applies.

• Interaction with Column 1 duty

– If a product is subject to both Column 1 and a Section 232 rate, the sum of Column 1 + Section 232 additional duty equals the applicable rate in clause (3) of the proclamation, unless Column 1 alone is higher, in which case only Column 1 applies.

3.4 Future scheduled changes

• January 20, 2029

– U.S. note 40(h)(ii) (MFN pricing zero‑tariff provision) is deleted.

– Heading 9903.04.65 is terminated and removed.

– Heading 9903.04.66’s reference is updated from (h)(iii) to (h)(ii) (technical renumbering).

– Practical effect: zero‑tariff treatment based on combined onshoring + MFN pricing agreements ends as of entries on or after 12:01 a.m. Eastern time January 20, 2029.

• April 2, 2030

– Heading 9903.04.64 is amended: the additional duty changes from +20% to +100%.

– Practical effect: companies relying solely on onshoring plans (without MFN zero‑rate, which ends in 2029) will face a 100% Section 232 rate from April 2, 2030, unless other exemptions apply.

4. Effective dates

• Proclamation date: April 2, 2026.

• Effective dates for tariffs and tariff treatment (clause (4) of proclamation)

– For companies listed in Annex III: effective for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Daylight Time on July 31, 2026.

– For all other companies: effective for such goods on or after 12:01 a.m. Eastern Daylight Time on September 29, 2026.

• Annex III companies (early effective date – July 31, 2026)

1. AbbVie Inc.

2. Amgen Inc.

3. AstraZeneca Pharmaceuticals, LP

4. Bristol Myers Squibb

5. Boehringer Ingelheim Pharmaceuticals, Inc.

6. Eli Lilly and Company

7. EMD Serono, Inc.

8. Genentech, Inc.

9. Gilead Sciences, Inc.

10. GlaxoSmithKline LLC and ViiV Healthcare Company

11. Johnson & Johnson

12. Merck Sharp & Dohme LLC

13. Novartis Pharmaceuticals Corporation

14. Novo Nordisk Inc.

15. Pfizer Inc.

16. Regeneron Pharmaceuticals, Inc.

17. Sanofi S.A.

• Company‑specific agreements already in place (Annex II)

– These companies have pre‑existing Section 232 tariff agreements that are ratified by the proclamation and may qualify for zero or reduced rates under headings 9903.04.64/65/66:

1. AbbVie Inc. (March 20, 2026)

2. Amgen Inc. (December 19, 2025)

3. AstraZeneca Pharmaceuticals, LP (March 20, 2026)

4. Bristol Myers Squibb (December 19, 2025)

5. Boehringer Ingelheim Pharmaceuticals, Inc. (December 19, 2025)

6. Eli Lilly and Company (February 23, 2026)

7. EMD Serono, Inc. (February 12, 2026)

8. Genentech, Inc. (December 19, 2025)

9. Gilead Sciences, Inc. (December 19, 2025)

10. Merck Sharp & Dohme LLC (February 11, 2026)

11. Novartis Pharmaceuticals Corporation (February 12, 2026)

12. Novo Nordisk Inc. (February 23, 2026)

13. Sanofi S.A. (December 19, 2025)

5. Required actions for importers, brokers, and compliance teams

5.1 Classification and product mapping

• Map all imported pharmaceutical and chemical products to the HTSUS codes listed in U.S. note 40(c) and Annex IV.
• For each covered HTSUS line, determine whether the imported article is a “pharmaceutical article” per U.S. note 40(c)(i) (finished drug or API/key starting material used to make a drug).
• For each pharmaceutical article, determine whether it is:

– A patented pharmaceutical article (check U.S. patent status and FDA Orange Book/Purple Book listings); or

– A generic pharmaceutical article (off‑patent, off exclusivity, approved under qualifying applications, or authorized generic/biosimilar imported by a generic/biosimilar manufacturer).

• Identify products that fall under special zero‑rate categories (orphan drugs, nuclear medicines, plasma‑derived therapies, fertility treatments, cell/gene therapies, ADCs, CBRN countermeasures, animal health pharmaceuticals) and monitor Federal Register notices for designations under heading 9903.04.66.

5.2 Chapter 99 declaration and entry procedures

• Update internal classification databases and broker instructions to include the appropriate Chapter 99 numbers (9903.04.60–9903.04.69) in addition to the base HTSUS classification.
• Ensure that only one of 9903.04.60–9903.04.69 is applied per entry line, as they are mutually exclusive.
• For entries claiming reduced or zero Section 232 rates based on:

– Country of origin (Japan, EU, Korea, Switzerland, Liechtenstein, UK): ensure robust origin documentation and correct declaration of origin.

– Onshoring plans or MFN pricing agreements: coordinate with the manufacturer to confirm that the company is on the Secretary’s list and that CBP has been notified; maintain supporting documentation.

– Specialty/orphan/urgent health need status: retain FDA designations, product labeling, and any Federal Register notices or Commerce determinations.

5.3 Company and supplier engagement

• For importers sourcing from Annex II/III companies, confirm with suppliers:

– Whether their products are covered by company‑specific agreements and what tariff treatment applies (e.g., zero rate under 9903.04.65 until January 20, 2029).

– Whether onshoring plans have been approved by Commerce and whether MFN pricing agreements with HHS are in place or in principle.

• For other suppliers, assess the feasibility and timing of entering into onshoring/MFN agreements to qualify for reduced or zero rates before the 2029/2030 changes.

5.4 Systems, valuation, and cost impact

• Update ERP, customs management, and broker systems to calculate:

– 100% ad valorem Section 232 duties for patented products under 9903.04.60 (or 15%/10% for qualifying origins, or 20% for onshoring plans, as applicable).

– Zero additional duty for generics (9903.04.67), U.S.-origin dosage forms (9903.04.68), and non‑pharmaceutical articles (9903.04.69).

• Model landed cost impacts for all patented products, especially those not covered by onshoring/MFN or specialty exemptions, and adjust pricing, sourcing, and inventory strategies.
• Consider use of drawback: the proclamation explicitly allows drawback for duties imposed under this action.

5.5 Foreign trade zones (FTZ) and origin considerations

• For products subject to Section 232 duties and admitted into U.S. FTZs on or after the effective dates:

– Must be admitted in “privileged foreign status” (19 CFR 146.41) unless eligible for domestic status under 19 CFR 146.43.

– Upon entry for consumption, the applicable ad valorem Section 232 rate will apply based on the privileged foreign classification.

• Confirm U.S.-origin status for products potentially eligible under 9903.04.68 (API packaged in dosage form that is a product of the United States) to avoid unnecessary Section 232 duties.

5.6 Monitoring and documentation

• Monitor Federal Register notices for:

– Criteria and process for onshoring plans and MFN pricing agreements.

– Lists of companies and products qualifying for special tariff treatment (9903.04.64–.66).

– Any changes to rates for specific countries or companies due to non‑compliance.

– Any modifications to HTSUS or administrative measures implementing this proclamation.

• Maintain documentation to support:

– Patent status and FDA listing (Orange Book/Purple Book) for patented vs generic determinations.

– Origin, product use, and regulatory status (e.g., orphan designation, nuclear medicine classification).

– Existence and terms of onshoring/MFN agreements where relied upon.

6. References

• Proclamation: “Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients into the United States,” April 2, 2026 (White House).
• Annexes I–IV (HTSUS modifications, company agreements, early‑effective companies, zero‑rate HTSUS codes):

– https://www.whitehouse.gov/wp-content/uploads/2026/04/Pharmaceuticals-Imports-ANNEXES-I-II-III-IV.pdf

• Related action: Proclamation 11012 of February 20, 2026, “Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems” (Annex IV codes are exempt from this surcharge).

Actionable next steps: Immediately identify all imports under the HTSUS codes listed in U.S. note 40(c) and Annex IV, determine patented vs generic status, confirm whether suppliers are Annex II/III companies or have onshoring/MFN agreements, and configure entry processes to declare the correct Chapter 99 codes and calculate the new Section 232 duties effective July 31, 2026 (for Annex III companies) and September 29, 2026 (for others).