❓WHAT HAPPENED: President Donald J. Trump imposed tariffs on patented pharmaceuticals and their ingredients under Section 232 of the Trade Expansion Act of 1962, to enhance national security and public health.
👤WHO WAS INVOLVED: President Trump, the Department of Commerce, and the Department of Health and Human Services (HHS).
📍WHEN & WHERE: The tariffs take effect in 120 days for large companies and 180 days for smaller companies, with pathways for compliance provided by the U.S. government.
💬KEY QUOTE: “America must manufacture pharmaceutical products in order to be safe, secure, and healthy.” – The White House
🎯IMPACT: The action aims to strengthen domestic manufacturing, reduce reliance on foreign imports, and protect national security.
President Donald J. Trump issued two directives on Thursday as part of his White House’s effort to reinstitute tariffs that were struck down by the U.S. Supreme Court earlier this year. In February, the high court, in a mixed decision, ruled that Trump’s imposition of trade duties under the International Emergency Economic Powers Act (IEEPA) was unlawful, as the regulatory powers granted to the President by Congress do not extend to forms of taxation like tariffs.
The new tariff order targets patented pharmaceuticals and their ingredients under Section 232 of the Trade Expansion Act of 1962, with President Trump citing the law’s national security provisions as grounds for the measure. Importantly, the use of the 1962 trade law allows Trump to circumvent objections to his use of IEEPA, though the implementation process for the tariffs is more drawn out.
According to the order, a 100 percent tariff rate will be imposed on foreign patented pharmaceutical products. However, countries and regional blocs that have already entered into established trade deals with the United States—such as the European Union, Japan, Korea, Switzerland, and the United Kingdom—will only face a 15 percent rate.
Notably, pharmaceutical companies entering into Most Favored Nation (MFN) pricing agreements with the Department of Health and Human Services (HHS) and onshoring agreements with the Department of Commerce can secure a zero percent tariff through January 20, 2029. Generic pharmaceuticals and specialty products are exempt from tariffs, though they will be reassessed next April.
“America must manufacture pharmaceutical products in order to be safe, secure, and healthy,” the White House stated in announcing the new trade measures, adding that the tariffs take effect in 120 days for large companies and 180 days for smaller companies.
In addition to imposing new pharmaceutical tariff rates, President Trump also issued updated guidance to strengthen existing tariffs on imported steel, aluminum, and copper. Under the new rules, products made entirely or almost entirely of aluminum, steel, or copper will face a flat 50 percent tariff on their full value, while derivative articles will incur a 25 percent tariff. Certain metal-intensive industrial and electrical grid equipment will face a 15 percent tariff through 2027 to support the ongoing expansion of the United States’ industrial base. Products manufactured abroad but composed entirely of American steel, aluminum, or copper will benefit from a lower tariff of 10 percent. Additionally, items with 15 percent or less steel, aluminum, or copper content will no longer be subject to Section 232 tariffs.
The preferential tariff treatment of foreign products containing U.S.-sourced aluminum, steel, or copper will likely face challenges from foreign governments at the World Trade Organization (WTO). In January this year, a WTO panel report found that certain tax credits enacted through the Inflation Reduction Act (IRA) violated international trade rules by favoring U.S. steel. According to the WTO, the measures violate international trade rules against subsidies contingent upon the use of domestic over imported products.
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