The Bureau of Industry and Security published a notice on September 22 that fills in the exemptions to the Section 232 pharmaceutical tariffs, and the practical effect is that a flat 100 percent duty on patented drugs is now a category test with an application process attached. Four days before the next deadline, the operative question for an importer is no longer where the product was made. It is what the product is, which statutory definition it satisfies, and whether the company has filed.
The rate reaches everyone else on September 29
Proclamation 11020, signed April 2, sets the default rate at 100 percent ad valorem on covered patented pharmaceuticals and their associated active pharmaceutical ingredients, classified under the Chapter 99 headings the proclamation created. That rate has applied since July 31 to the companies the proclamation lists by name in Annex III. Everyone else has been filing under a companion heading at an additional rate of zero, an arrangement that ends on September 29. The technical changes in the September notice, including a batch of corrections to the annexes, take effect at the same moment.
Two boundaries are worth stating because they decide how much work the exemption process carries. Inactive ingredients and excipients are outside the covered goods, while finished products, active ingredients and key starting materials are inside. Goods of United States origin are not subject to the duties at all, drawback remains available, and merchandise admitted to a foreign trade zone needs privileged foreign status to keep the rate it entered under, which is the mechanism importers use when they want to preserve a duty rate while goods sit in a zone.
The nine categories are written in FDA law, not trade law
The zero-rate list is not a schedule of products the administration favors. It is a set of definitions lifted from the Food, Drug and Cosmetic Act and the Public Health Service Act, and each one is narrow in a way that rewards reading. The categories, as Commerce defines them, are orphan drugs and biologics, nuclear medicines, plasma-derived therapies, fertility drugs, cell therapy products, gene therapy products, antibody drug conjugates, CBRN medical countermeasures, and animal healthcare products.
Several entries are narrower than their labels suggest. An orphan drug qualifies only if every approved or licensed indication treats a rare disease, so a product with one common-condition indication loses the category entirely. Plasma-derived therapies are defined by reference to the statutory provision governing human whole blood and plasma. The CBRN category reaches products for emerging infectious diseases as well as countermeasures against chemical, biological, radiological and nuclear agents. Animal health covers veterinary pharmaceuticals and biologics from the USDA's center for veterinary biologics, including vaccines and diagnostics, and a technical correction in the same notice made unpatented animal health products part of the generic definition instead.
The definitions apply to investigational drugs as well as approved ones, which is the detail that matters for anyone importing material for a trial that has not read out.
The test is applied product by product and indication by indication
Commerce says the assessment happens at the product and indication level, and that determinations are individual, fact specific and company specific. That language describes an administrative regime rather than a border rule. A company seeking the urgent-health-need route files a request by email to a dedicated Commerce mailbox, one product per application, identifying the ten-digit tariff classification, the brand or investigational new drug number and active ingredient, the category claimed, the country of origin and export, the importer of record and the manufacturer. It must also make the case that the product addresses an urgent American health need: what the disease is, whether alternatives exist, how many American patients are affected, and where else the product is available.
Commerce consults the Office of the United States Trade Representative and the Department of Health and Human Services before deciding, and approved requests are transmitted to Customs and Border Protection, which applies the adjustment when the entry summary is filed and can ask for validating documentation afterwards.
The breadth of that file is the point. A tariff that depends on a confidential company-specific determination cannot be planned around the way a published rate can, and the two-month gap between the July 31 start and the September 22 notice left importers guessing which tier they were in. The notice pledges confidentiality for the submissions under the Trade Secrets Act and two exemptions in the Freedom of Information Act, which is standard for this kind of filing and also means the results will stay private. A competitor will not be able to read who received an urgent-need determination and who did not, so the effective rate structure across the industry will be visible only through earnings commentary and entry data rather than through a published list.
Two procedural details suggest the agency is still catching up to its own timetable. The notice invokes an emergency clearance under the Paperwork Reduction Act because Commerce needed to start evaluating requests before the September 29 effective date, and the formal comment period on the collection, 60 days long, will run afterwards. Submissions are voluntary, which is accurate in the narrow sense that a company can choose to pay 100 percent instead.
The onshoring ladder is where the tariff becomes a negotiation
Two more rates sit in the schedule, and they have conditions rather than definitions attached. A company with a Commerce-approved onshoring plan pays 20 percent, rising to 100 percent on April 2, 2030, which is the date the original proclamation sets as the horizon for domestic production. A company with both an onshoring plan and a most-favored-nation pricing agreement with Health and Human Services pays nothing, and that zero expires on January 20, 2029.
Read together, the tiers give a manufacturer a menu: relocate production, agree to match the lowest price paid by comparable countries, or pay a rate that doubles by 2030. Where more than one Section 232 rate could apply to the same entry, the lowest governs, which makes the certification work worth doing. The MFN tier in particular ties the tariff to a pricing commitment that the same agency is pursuing through separate channels, so a company that signs one agreement is effectively settling two policy fights at once. Manufacturers have been negotiating versions of that trade through the drug pricing arrangements we covered when the most-favored-nation model was extended to Medicaid, and the tariff schedule gives those negotiations a second lever.
Generics and biosimilars sit outside the regime for now
The notice confirms what the proclamation implied and what generic manufacturers had been arguing: generic pharmaceuticals, biosimilars and their ingredients are not subject to the Section 232 tariffs at this time, and Commerce will reassess that position within a year. The same notice creates a zero-rate tariff heading for pharmaceutical articles imported solely for clinical trials, research and development, or other noncommercial uses, which keeps early-stage material out of the duty calculation even when it crosses the border repeatedly.
Both of those choices are provisional in a way the nine categories are not. The generic exclusion is written as a judgment about the present, with a review date attached, and the review is the mechanism through which a large share of the American drug supply could be pulled into the regime later. Companies that build their import strategy on the exclusion are relying on a decision that has already been scheduled to be revisited.
What the country rates show that the categories do not
The headline that circulated this week said the United States had confirmed zero tariffs for South Korea, which is half right and misleading in the way that matters. Korea's general rate on covered patented pharmaceuticals is 15 percent, the same tier as the European Union, Japan, Switzerland and Liechtenstein, under the trade agreement reached in November. The United Kingdom sits at zero under its own arrangement. What Korea gained in the September notice is eligibility for the nine categories, alongside 18 other listed jurisdictions: Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Jordan, Malaysia, North Macedonia, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom and Vietnam.
The list itself carries information. It tracks the countries with a current or forthcoming trade and security framework agreement with the United States, and Commerce has said it can update the list by later notice. That converts eligibility into something closer to a diplomatic instrument than a technical schedule, and it means a manufacturer's exposure depends partly on the state of its government's relationship with Washington at the moment of entry.
The pattern is not new to this administration's tariff policy, which we analyzed when the polysilicon duties drew a line through the solar value chain. What differs here is the granularity. A polysilicon tariff can be modeled from the published rate. A pharmaceutical tariff that turns on whether a single indication is rare, whether a plasma product meets a statutory definition, or whether a company's onshoring plan has been approved is a different kind of risk, and it is one that sits with regulatory affairs and trade compliance teams rather than with a procurement desk.
The September 29 date is the immediate item. After that, the request process continues on a rolling basis, the 60-day comment notice will follow, the first generics review lands within a year, the zero rate conditioned on a pricing agreement expires in January 2029, and the onshoring tier steps up to the full rate in April 2030. Each of those dates is a point at which a company that has organized its imports around the current schedule has to redo the calculation.
For a company importing a gene therapy for a clinical trial, none of it applies. For a company importing the same product for commercial sale from a jurisdiction that is not on the eligibility list, all of it does, and the work of proving otherwise starts with a ten-digit code, an indication list and an email.
Primary sources
- Proclamation 11020, Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States, April 2, 2026 (91 FR 18183), for the 100 percent default rate, the Annex III companies and the effective dates.
- Bureau of Industry and Security notice, September 22, 2026, as summarized by EY Tax News, for the nine zero-rate categories, the 19 eligible jurisdictions and the product-level definitions.
- GHY International, for the country rates, the onshoring and pricing tiers, the treatment of generics and biosimilars, and the exclusions for United States goods and foreign trade zones.
- International Trade Today, for the exemption request procedure, the emergency Paperwork Reduction Act clearance and the follow-on comment period.
- Asia Economy, for South Korea's 15 percent rate and the one-year biosimilar exclusion.