Trump Administration Takes Next Steps Toward Pharmaceutical Tariffs

On April 14, 2025, the U.S. Department of Commerce released a Notice announcing that it was conducting a Section 232 investigation into pharmaceuticals and related products and calling for comments to inform that investigation. According to the Notice, the investigation was launched on April 1, 2025. This investigation is very likely to result in a recommendation to the president that he impose significant tariffs on imports of pharmaceuticals. The current deadline for public comments is May 7, 2025.

Background

Since his inauguration, President Trump has frequently indicated that he intends to impose substantial tariffs on pharmaceuticals. His statements point to concerns about foreign control of drug supply chains, as well as a desire to bring pharmaceutical manufacturing back to the United States. His administration is now proceeding under Section 232 of the Trade Expansion Act of 1962 (Section 232) (codified at 19 U.S.C. § 1862), a statute that allows the president to adjust imports of goods into the United States if goods are being imported in quantities or under circumstances that threaten to impair U.S. “national security.”

Clients should be aware that recent uses of Section 232 have taken a broad view of “national security” — a term that the statute does not define. The Trump administration has already relied on this statute to impose 25% tariffs on steel, aluminum, automobiles, and automobile parts. Invoking this same authority, the administration is also presently conducting investigations of imports of copper, lumber, and semiconductor products. The statute has been used to impose significant tariffs on imports from close allies as well as economic competitors like China. In addition, tariffs have been imposed on products not currently available from U.S. suppliers and on products that are in short supply in the United States.

Potentially Broad Scope

The Notice indicates that the Department of Commerce is casting a wide net in this investigation, specifying that it will be considering finished drug products (both generic and non-generic), medical countermeasures, critical inputs such as starting materials and active pharmaceutical ingredients, and “derivative products of those items.” Comments and other outreach to the administration (and to Congress) will be important in shaping the ultimate contours of any tariff action, such as its scope and how it defines covered products, the timing of any tariff action, and the specific levels of any tariff rates. Comments and outreach may also be critical to establishing an exclusion process or other measures to avoid supply interruptions and drug shortages with potentially significant patient impacts.

Next Steps

The Notice cites to criteria in 19 C.F.R. § 705.4 for determining the effect of imports on national security. It includes a broad range of issues on which it is soliciting comments, including U.S. demand, the feasibility of increasing U.S. domestic production capacity, the extent to which domestic production can meet U.S. demands, the role of foreign supply chains, and the concentration of imports in supply chains for drugs and drug inputs like API. Specifically, the agency seeks comments on the following issues:

1.  Current and projected demand for pharmaceuticals and pharmaceutical ingredients in the United States

2.  The extent to which domestic production can meet domestic demand

3.  The role of foreign supply chains, particularly of major exporters, in meeting domestic demand

4.  The concentration of imports from a small number of suppliers and associated risks

5.  The impact of foreign government subsidies and predatory trade practices on domestic industry competitiveness

6.  The economic impact of artificially suppressed prices due to foreign unfair trade practices and state-sponsored overproduction

7.  The potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over pharmaceuticals supplies

8.  The feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance

9.  The impact of current trade policies on domestic production, and whether additional measures, including tariffs or quotas, are necessary to protect national security

The time period for comments is short — only 21 days — but given the criticality of these issues, we expect to see comments from stakeholders across the pharmaceutical industry, investors, patient and consumer advocacy groups, and more.

What Can Life Sciences Companies Do

• Consider Engaging: Companies should consider the potential impact of tariffs on shortages, patient access, and innovation, and whether those stories would be helpful to share in formal comments by associations, advocacy groups, or other stakeholders. In addition to considering comments, companies should review their public engagement strategies to ensure federal policymakers understand the implications of these trade dynamics to their businesses, investment plans, and U.S. workforce.
• Prepare for Potential Retaliation by Trade Partners: In response to U.S. tariff actions, trade partners, including Canada, the EU, and China have taken retaliatory actions placing tariffs on U.S. products and in some cases exploring other forms of retaliation, such as export restrictions. These actions may impact pharmaceutical supplies chains for the U.S. and other markets.
• Review Supply Chains and Customs Compliance Procedures: Companies should review supply chains and sourcing strategies to mitigate potential tariff risks. In addition, companies should prepare for enhanced scrutiny by U.S. Customs and Border Protection (CBP) of pharmaceutical imports. The Trump administration is increasing enforcement activity around tariffs generally. In recent actions imposing Section 232 tariffs on other products, President Trump instructed CBP to increase monetary penalties for customs violations. Companies importing pharmaceutical products may face closer examination of their product valuation, country of origin, and tariff classifications.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.