The Trump administration has expanded tariffs on imported patented medicines and their ingredients to include mid-sized and smaller drugmakers, extending a policy initially targeting 17 large manufacturers in July. The new measures, implemented Sept. 29, apply duties that can reach 100% depending on a company’s onshoring plans, pricing agreements, and country of origin. The expansion affects the broader pharmaceutical industry, with companies facing potential cost increases that could influence manufacturing decisions or drug pricing.
Tariff Rates and Exemptions
Companies without exemptions or agreements must absorb import costs, rethink where they manufacture, or raise prices, a challenge amid existing consumer resistance to high prescription drug costs. A February poll by the Kaiser Family Foundation found 82% of U.S. adults consider drug prices unreasonable. Building new manufacturing facilities can cost up to $2 billion and take five to ten years, and small biotechs typically rely on contract manufacturers, the trade organization BIO said in its May 2025 comments to Commerce.
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The administration imposed tariffs under Section 232 of the Trade Expansion Act of 1962, citing national security concerns. Firms with approved onshoring plans qualify for a 20% rate, increasing to 100% by April 2030. Companies combining onshoring with most-favored-nation pricing agreements can avoid tariffs entirely through Jan. 20, 2029, according to KPMG’s summary of the proclamation. Country-based arrangements also reduce rates: products from the EU, Japan, South Korea, Switzerland, and Liechtenstein face 15%, while UK-origin goods receive zero tariffs through Jan. 19, 2029.
Industry Response and R&D Concerns
Chris Young, principal, trade and customs at KPMG, in an emailed statement, said, “What a company pays will depend on its onshoring and pricing commitments, product mix and sourcing, so near-term cost and compliance work has to sit alongside longer-term manufacturing and supply chain decisions.” BIO has criticized the policy, arguing that tariffs divert scarce resources away from research and development, and argued the policy would delay new treatments and weaken American biotech against China’s rising industry. A Commerce Department notice published Sept. 23 provides a significant exemption for research.
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Covered products and ingredients imported solely for clinical trials, R&D or other noncommercial use receive a 0% additional tariff. Specialty medicines, including cell and gene therapies and antibody-drug conjugates, also qualify for zero tariffs when they come from a jurisdiction with a trade and security framework agreement or meet an urgent U.S. health need. Outside these Section 232 tariffs for now are generic medicines and biosimilars, and the April proclamation directs Commerce to assess within a year whether to extend them to generics. Trump separately announced in July a phased plan for imported generics, with no duties through July 2028, then 100%, rising to 200% a year later.
Broader Trade Implications
The policy reflects broader efforts to reduce reliance on foreign drug manufacturing.
