US Tariffs on Pharmaceuticals

What This Covers

The pharmaceuticals surcharge covers medications, active pharmaceutical ingredients (APIs), medical instruments, and medical devices classified under HTS chapters 30 and 90. Most finished pharmaceutical products enter the United States duty-free, reflecting longstanding policy prioritizing affordable access to medicines. The Supreme Court's February 20, 2026 ruling struck down IEEPA reciprocal tariffs, and all pharmaceutical-exporting countries now face a uniform 10% Section 122 tariff (effective February 24, 2026, expiring ~July 24, 2026). For products with a 0% base rate, this 10% Section 122 tariff constitutes the entire duty burden.

Most Affected Countries

Ireland, the European manufacturing hub for many major drug companies, now faces the uniform 10% Section 122 rate — a reduction from the EU's former IEEPA reciprocal rate — on any pharmaceutical products not covered by duty-free treatment. India, the world's leading supplier of generic medications and APIs, benefits from the drop to a uniform 10% rate, which is lower than India's former country-specific IEEPA rate and reduces cost pressure on the affordable generics that American patients depend on. Germany, Switzerland, and the United Kingdom all now face the same 10% Section 122 rate, eliminating the old IEEPA-driven differences between European pharmaceutical sources.

How Surcharges Stack

For most finished pharmaceuticals with a 0% base rate, the 10% Section 122 tariff represents the entirety of the duty burden — a simpler calculation than the old regime of varying reciprocal rates by country. An API sourced from India now faces a 10% Section 122 tariff applied to the full ingredient value, which while not insignificant is lower than India's former IEEPA rate. Medical devices from Germany face the 10% Section 122 rate on top of any applicable base duty, which can be higher than 0% for certain device categories. Products from Israel may benefit from the US-Israel FTA, potentially reducing or eliminating the Section 122 tariff impact. The temporary nature of Section 122 (expiring ~July 2026) means pharmaceutical supply costs could decrease further in the near term.

Sourcing Strategies

The uniform 10% Section 122 rate has simplified pharmaceutical sourcing by eliminating tariff-driven preferences between countries. Companies should ensure their products are properly classified, as the distinction between duty-free finished pharmaceuticals and tariff-bearing APIs or devices determines whether Section 122 adds meaningful cost. For APIs and intermediates from India and China, the 10% uniform rate reduces but does not eliminate the tariff incentive to explore alternative suppliers in countries with US free trade agreements. Planning for Section 122's July 2026 expiration is especially important for pharmaceutical companies negotiating multi-year supply agreements, as non-China API costs could drop to near-zero tariff rates once the temporary measure lapses.