232 Investigation of Pharmaceuticals: Potential Tariffs and Tight Comment Deadline

Effective April 5, the United States imposed a 10% baseline tariff on imports from nearly all countries, excluding products from Canada and Mexico, and those products contained in the Harmonized Tariff Schedule of the United States Column 2 and the Annex II list attached to Executive Order 14257. In contrast, Chinese imports are subject an increased 125% reciprocal tariff rate, combined with 20% International Emergency Economic Powers Act duty rate in effect since March 4.

On

Find Executive Order 14257 here.

Among the products listed in Annex II were many pharmaceutical products. While this may have been a relief for importers of pharmaceuticals and pharmaceutical ingredients, the relief was short lived as the US Department of Commerce issued a Federal Register Notice on April 16 announcing the launch of a Section 232 investigation to evaluate the national security implications of pharmaceutical imports.

Potential Impact of the Section 232 Investigation – More Tariffs

This investigation could have far-reaching effects on the pharmaceutical industry, including manufacturers who process the active pharmaceutical ingredient (API) in the United States into the final medicament. Reports on Section 232 investigations are due 270 days after initiation and include recommendations to the president. Although the results of the investigation are still months away, the Trump Administration has generally been imposing tariffs of 25% for other products subject to additional 232 tariffs, such as steel, aluminum, and autos.

The Section 232 investigation aims to assess how imports of pharmaceuticals and pharmaceutical ingredients affect the national security of the United States. The investigation will consider various factors, including domestic production capabilities, foreign dependencies, and the impact of trade practices on the US pharmaceutical industry. Depending on the outcome of this investigation, there may be additional tariffs imposed on pharmaceutical imports. This could affect pricing, supply chain dynamics, and overall competitiveness for the pharmaceutical industry.

Opportunity to Provide Comments to Commerce – But a Fast-Approaching Deadline

Importers of pharmaceuticals and their precursors should be aware of these developments and consider submitting comments to Commerce to voice their concerns and insights. Commerce is particularly interested in public comments on several critical issues, such as:

  • The capacity of domestic production to meet US demand.
  • The role and risks of foreign supply chains.
  • The impact of foreign government subsidies and trade practices on US industry competitiveness.
  • The feasibility of boosting domestic production to lessen import reliance.
  • The potential for export restrictions and their national security implications.

This is an opportunity for pharmaceutical businesses to influence the investigation by submitting written comments, analyses, or information.

The window for submissions for this 232 investigation is particularly brief. Commerce will only accept submission for 21 days after the notice’s publication in the Federal Register on April 16. Therefore, comments must be submitted to Commerce by May 7.

Contacts

Continue Reading