100%, 20%, 15%, 0%: Decoding the New U.S. Pharma Tariff Structure

If your company imports pharmaceutical products, active ingredients, or the chemicals that go into either one, the last four months have brought some of the most significant trade policy changes in a generation. Two separate tariff actions are now in motion — one already partially in effect, one still being rolled out — and together they touch nearly every point in the pharmaceutical supply chain, from the finished drug on the shelf to the precursor chemicals used to synthesize it.

Here's what's actually happened, sourced directly from the government notices themselves, and what companies in pharma and chemicals should be doing about it.

Patented drugs and their ingredients: tariffs are live starting this week

On April 2, 2026, the White House issued Proclamation 11020, "Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients into the United States." Under Section 232 of the Trade Expansion Act of 1962, it imposes a 100% tariff on patented pharmaceutical products and their associated active pharmaceutical ingredients (APIs), including key starting materials — the precursor chemicals used to synthesize those APIs.

Per the proclamation text, the tariff applies to goods entered for consumption on or after 12:01 a.m. Eastern time on July 31, 2026 for a group of large companies named in Annex III of the proclamation, and September 29, 2026 for everyone else. Once in effect, the tariff continues indefinitely unless expressly reduced, modified, or terminated. The 17 companies named in Annex III — facing the earlier deadline — include AbbVie, Amgen, AstraZeneca, Bristol Myers Squibb, Boehringer Ingelheim, Eli Lilly, EMD Serono, Genentech, Gilead Sciences, GlaxoSmithKline/ViiV Healthcare, Johnson & Johnson, Merck Sharp & Dohme, Novartis, Novo Nordisk, Pfizer, Regeneron, and Sanofi. A separate group of roughly 13 companies listed in Annex II had already reached pricing and onshoring agreements with the administration before the proclamation was signed, and qualify for a 0% rate rather than facing the tariff at all. Companies outside both lists default to the September 29 effective date and the standard rate structure described below.

A few things soften the impact for specific categories:

• Generic pharmaceuticals and their associated ingredients are not currently subject to this tariff.

• U.S.-origin pharmaceutical products are excluded.

• Country-specific rates apply where trade agreements exist: the EU, Japan, South Korea, Switzerland, and Liechtenstein face 15%. The United Kingdom's baseline rate under the proclamation is 10%, but under the separately concluded U.S.-UK pharmaceutical agreement, UK-origin products are expected to enter tariff-free for at least three years, contingent on major UK pharmaceutical companies completing MFN and tariff agreements with HHS and Commerce.

• Where a product could qualify for more than one rate under the proclamation — for example, a company with an onshoring agreement (20%) exporting from the EU (15%) — the lower of the applicable rates governs.

• A defined set of specialty categories — orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody-drug conjugates, and CBRN medical countermeasures — can qualify for a 0% rate.

Importantly, the proclamation directs the Secretary of Commerce to report back within one year on whether generics should eventually be brought into scope. Nothing here should be treated as a permanent exemption.

Generic drugs get their own, later timeline

Separately, on July 21, 2026, the administration announced a phased tariff structure for generic drugs, aimed at encouraging domestic manufacturing over a longer runway. Under this plan, generic drugs will remain untariffed starting August 1, 2026, for a two-year period, after which a 100% tariff applies for one year (August 2028–2029), rising to 200% after that.

As of this writing, this generic-drug track has been announced but not yet codified into a signed proclamation with implementing regulations — worth watching for the formal notice before treating specific rates or scope as final.

The chemistry doesn't stop at the API

One detail that's easy to miss: the April proclamation's scope extends to "key starting materials" — the precursor chemicals consumed in API synthesis — not just the finished drug or even the API itself. Every API tied to a covered patented drug is subject to the tariff regardless of whether the API itself carries a patent.

Separately, general chemical imports (HTS Chapters 28–38) carry their own duty structure, independent of the pharma-specific action, and it changed again just last week. The 10% global Section 122 surcharge that had applied broadly since February expired by operation of law on July 24, 2026, at its 150-day statutory limit; Congress did not extend it. A new Section 301 tariff took effect the same day, applying a 10–12.5% rate to goods from roughly 60–80 economies, with no built-in expiration date. EU-origin goods remain on the separately negotiated 15% ceiling from the U.S.-EU trade deal. For companies sourcing pharmaceutical-grade chemicals, both the pharma-specific Section 232 regime and this general chemicals stack can apply to different parts of the same supply chain, and the general stack is worth re-checking now given how recently it changed.

There's a path to relief, but it comes with real documentation requirements

Commerce has opened a process for companies to apply for company-specific onshoring agreements that reduce the tariff to 20%, or to 0% (through January 2029) if paired with a Most Favored Nation pricing agreement with the Department of Health and Human Services. Per the Federal Register notice describing this process, a complete application requires:

• A detailed onshoring commitment covering which part of the company's patented portfolio will move to U.S. production, along with supporting investment and production plans (Annex A).

• A product-level exhibit listing every product for which preferential treatment is requested, including HTSUS codes, country of origin, and exporter details (Annex B).

• Corporate and beneficial-ownership information.

• A signed certification from a senior company officer attesting the submission is accurate and complete.

Companies that receive approval aren't done at that point — they're required to file periodic progress reports, which Commerce can require to be externally audited, and misrepresentation can result in retroactive reimposition of tariffs plus penalties.

Two practical notes on timing: the application window for this pathway closed on June 12, 2026 — about seven weeks before the July 31 tariff takes effect for the Annex III companies — so any company that hasn't already filed is not going through this specific route before that deadline. Commerce estimated roughly 450 companies might apply, but its notice does not commit to a timeline for reviewing and approving applications, and no public list of approved companies has been released as of this writing. Companies waiting on a pending application should not assume approval will be in hand by an effective date.

What pharmaceutical and chemical companies should be doing now

• Map your portfolio against Annex I and Annex IV. Determine which finished products, APIs, and starting materials fall under the tariffed HTSUS codes versus the zero-rate exclusions.

• Confirm patent status. Whether a drug is listed as patented in the FDA's Orange Book (small molecules) or Purple Book (biologics) determines tariff exposure; generics and biosimilars are currently out of scope.

• Re-cost contracts and budgets against the July 31 and September 29 effective dates, particularly where pricing or supply agreements were negotiated before April 2026.

• Evaluate onshoring and MFN pathways early — if not already filed. The June 12, 2026 application window for this specific relief mechanism has closed; companies with pending applications should track approval status rather than assume it will be resolved by the relevant effective date.

• Watch the generic-drug track closely. The rates are set, but the formal implementing rule — and details on how it applies to finished products versus APIs — hasn't been published yet.

• Re-check general chemical import exposure separately. The Section 122 surcharge that applied broadly through July 24 has expired and been replaced by a new Section 301 tariff on a different set of countries — this affects precursor chemical sourcing independent of the pharma-specific tariff track above.

Where SAIL fits in

Trade compliance teams are being asked to answer harder classification and documentation questions on a faster timeline than most existing tools were built for. SAIL's workspace is built around exactly this kind of structured, auditable classification work — mapping products against HS/HTS codes, tracking regulatory changes as they're published, and centralizing the documentation trail that audits and applications like this one require.

SAIL's classification and documentation approach was built for chemical and industrial supply chains, and the same structure — HS/HTS mapping, country-of-origin tracking, auditable documentation — applies naturally to pharmaceutical inputs as well. If your team is navigating this landscape, we'd welcome the conversation — reach out and let's talk through where you are.