100% U.S. Tariff on Branded/Patented Drugs Effective October 1, 2025 | Foley Hoag LLP

Summary

• The President announced on Truth Social that branded or patented pharmaceutical products will be subject to a 100% tariff unless the manufacturer “is building” their manufacturing facility in the United States. A manufacturer “is building” if they have broken ground or “construction has started” on a U.S. manufacturing facility.
• This announcement follows an ongoing Section 232 investigation by the Department of Commerce and precedes a public Food and Drug Administration (FDA) meeting scheduled for September 30th regarding FDA’s Precheck Program to promote drug manufacturing onshoring.
• The tariff announcement was made the same day as the Trump administration published a notice signaling an expected announcement of a new drug pricing model, the Global Benchmark for Efficient Drug Pricing (GLOBE) Model (CMS-5545) proposed rule. This model will likely attempt to force pharmaceutical manufacturers to cut drug prices to the lower levels available in other wealthy countries.
• Questions remain regarding the scope of products included, when a manufacturer “is building” a U.S. facility, potential exemptions and treatment of combination products.

Overview of the New Tariff Policy

On September 25, 2025, President Trump, on Truth Social, announced that the United States will impose a 100% tariff on imports of any “branded or patented” pharmaceutical products, effective October 1, 2025. The only exemption to this sweeping tariff is for companies that are actively “building” a U.S. manufacturing plant—a term defined in public statements as applying to projects that have “broken ground” and/or are “under construction.” This move marks a dramatic shift in U.S. trade and industrial policy for the pharmaceutical sector, which has historically benefited from low or zero tariffs. Coinciding with this tariff announcement, the Trump administration (on the same day) published a notice signaling an expected announcement of a new drug pricing model—the GLOBE Model proposed rule. The GLOBE Model’s likely aim will be to force pharmaceutical manufacturers to cut drug prices to the lower levels available in other wealthy countries.

In parallel, a separate U.S.-EU trade framework may cap tariffs on EU-origin pharmaceutical goods at 15%, provided the agreement is fully implemented. The 100% tariff rate may also not apply to pharmaceutical goods from Japan based on a trade deal reached between the US and Japan.

Legal Basis and Policy Context

The Administration’s decision is rooted in an ongoing Section 232 “national security” investigation into pharmaceutical imports. The President has also invoked emergency tariff authorities under the International Emergency Economic Powers Act (IEEPA) to impose country-specific tariffs. The stated rationale for these tariffs is to strengthen U.S. supply chains, reduce reliance on foreign sources for critical medicines, and address national security concerns. Notably, President Trump has signaled that these tariffs could escalate further, with rates of 150% to 250% floated for the future. The Department of Commerce has clarified that pharmaceuticals are being examined in a dedicated Section 232 track, separate from other recent investigations into medical devices and industrial goods.

Exemptions and Special Provisions

There are two primary ways to avoid the 100% tariff. First, a company can qualify for an exemption if it is “building” a U.S. pharmaceutical manufacturing plant, with construction having started by the time of import. The President’s announcement mentions that projects that have broken ground or otherwise under active construction meet this requirement. This follows an August announcement by FDA regarding a new Pre-Check program to streamline and expedite the construction and approval of domestic drug manufacturing facilities. FDA is hosting a meeting on September 30^th related to onshoring manufacturing for pharmaceutical products.

Second, under the new U.S.-EU trade framework, pharmaceutical imports from the European Union may be subject to a lower, 15% tariff ceiling—provided the agreement is fully implemented and the importer can document EU origin. The same may be true for imports from other countries that have struck trade deals with the U.S., like Japan. Companies should consult with customs counsel and their brokers to confirm eligibility for these exemptions. 

Outstanding Questions and Areas of Uncertainty

Several key details remain unclear and are awaiting formal guidance from the Department of Commerce, U.S. Trade Representative (USTR), and Customs and Border Protection (CBP). These include:

• The precise definitions of “branded or patented”: While this likely applies to products that are marketed under a New Drug Application (NDA) or Biologics License Application (BLA), the applicability to devices and combination products is unclear.
• “Branded or patented” meaning: More clarification is needed regarding whether “branded or patented” is intended to make the two terms synonymous or if every branded or list drug and every product that has a patent fall under the scope of the tariffs.
• The scope of imports subject to the tariff: The announcement does not spell out whether the tariff applies only to finished dosage forms or also to APIs and manufacturing intermediates.
• Proof of Building: The announcement does not provide the evidentiary requirements necessary for proving that a company “is building” a U.S. manufacturing facility.
• Facility Functions: Also unclear is whether an expansion of an existing facility to conduct new manufacturing steps constitute “building,” or the steps that must be conducted in the U.S. to meet the “is building” exemption.
• Importation Practices: Relevant agencies will need to describe the process for claiming, documenting, and disputing exemptions at the time of import.
• Broader Tariff Implications: The announcement does not specify how the new tariffs will interact with existing country-specific duties and the mechanics of any negotiated tariff caps reached in trade deals with the EU, Japan or otherwise.
• Relationship to the Trump administration’s drug pricing initiatives: Stakeholders are tracking actions related to pharmaceutical tariffs to understand any interplay between the tariffs, other broad administration enforcement actions against pharmaceutical manufacturers and the administration’s drug pricing initiatives.

No grace periods, product carve-outs or hardship waivers have been announced as of the publication of this alert.

Pharmaceutical Manufacturer Response

Pharmaceutical product manufacturers should map their product portfolios and assess their exposure to these tariffs. We are closely monitoring agency guidance and will provide updates as soon as CBP or Commerce publish procedural details. We are available to assist interested clients with conducting tailored exposure analyses, coming up with trade strategies, helping assess supply chain management risks, and/or helping with vendor or supplier contract review and renegotiation.