On April 2, 2026 — exactly one year after his first "Liberation Day" tariff announcement — President Donald Trump signed an executive order imposing a 100% tariff on patented pharmaceutical products and their active ingredients imported into the United States. The order targets any drugmaker that has not reached a "most favored nation" pricing agreement with the administration. Companies that have already signed deals, including Pfizer, Eli Lilly, Novo Nordisk, Bristol Myers Squibb, and AstraZeneca, face zero tariffs on imports. Companies that have not signed have 120 to 180 days before the 100% rate kicks in.
The order marks the formal arrival of a threat that has hung over the pharmaceutical industry for more than a year. A senior administration official confirmed on a press call Thursday that 17 drugmakers have made public pricing announcements, 13 of which have fully executed agreements with the White House. Four more are in active negotiations. The tariff is the stick behind that process.
How the Tariff Structure Works
The executive order creates a tiered system, not a single universal levy. The rate a company faces depends on whether it has struck a pricing deal, whether it is building U.S. manufacturing facilities, and where its home country sits in terms of broader trade agreements with the United States.
0% tariff: Companies that have signed a most favored nation pricing deal with the White House and are actively constructing U.S. manufacturing facilities for patented pharmaceuticals and their ingredients.
20% tariff, rising to 100% in four years: Companies that are building U.S. facilities but have not yet signed a pricing deal. The administration is treating the onshoring commitment as partial mitigation. Domestic plants must be completed by January 2029 to qualify for this track.
100% tariff, effective in 120 to 180 days: Companies that have neither a pricing deal nor a U.S. manufacturing commitment. Larger drugmakers face the 120-day window. Smaller companies that rely on contract manufacturers get 180 days.
Country-level trade deals also modify the rate. The European Union, Japan, South Korea, and Switzerland will face a 15% tariff on patented pharmaceuticals, matching the rates already agreed for most goods in their broader trade frameworks with the U.S. The United Kingdom will face a 10% tariff, reflecting an existing bilateral agreement — with the White House noting Thursday that rate would "reduce to zero" under future trade arrangements. The U.K. previously said it secured a 0% rate for British medicines exported to the United States for at least three years, according to AP News.
Biosimilars, genetic products, and related ingredients are not subject to tariffs at this time but will be reassessed in one year, the White House said in a fact sheet. Certain specialty pharmaceutical products, including those for animal health and treatments for rare conditions, are exempt if they come from countries with trade deals or meet an urgent public health need.
The Legal Basis: Section 232 Again
Trump invoked Section 232 of the Trade Expansion Act of 1962 to impose the pharmaceutical levies — the same authority he used to impose tariffs on steel, aluminum, copper, automobiles, lumber, and kitchen cabinets. Section 232 allows the president to restrict imports that a Commerce Department investigation has determined pose a threat to national security.
In the executive order, Trump stated that the action was necessary "to address the threatened impairment of the national security posed by imports of pharmaceuticals and pharmaceutical ingredients," citing the Commerce Department investigation that made that finding.
The use of Section 232 is significant because it is the legal basis that survived the Supreme Court's February 2026 ruling. That ruling struck down Trump's broader global "Liberation Day" tariffs, which were imposed under the International Emergency Economic Powers Act. Section 232 authority was not part of that ruling and remains intact. The administration has been methodically moving sector-specific tariffs onto Section 232 grounds since the Supreme Court decision, and Thursday's pharmaceutical order is the latest example of that strategy.
Who Has Already Signed — and What They Agreed To
The threat of pharmaceutical tariffs has been hanging over the industry since September 2025, when Trump first explicitly threatened a 100% levy on branded and patented imports. That pressure drove a wave of pricing agreements with the White House over the following months.
According to Reuters, which published a detailed list Thursday, the deals include:
Eli Lilly — agreed in November to offer Medicare beneficiaries its obesity medications Zepbound and orforglipron at no more than $50 per month, with additional discounts for patients who pay out of pocket through LillyDirect.
Novo Nordisk — agreed to provide widely-used insulin products, including NovoLog and Tresiba, at $35 per month through the administration's TrumpRx program.
Pfizer, Bristol Myers Squibb, and AstraZeneca — among the companies that signed full agreements, according to the Guardian and Politico. Their imports face no tariffs under the executive order.
The New York Times reported Thursday that 16 major pharmaceutical companies in total have reached deals with the administration in recent months, including the makers of blockbuster weight-loss drugs and other well-known branded medications.
Where U.S. Drug Imports Actually Come From
The framing of the tariff as a national security measure reflects the genuine geographic concentration of U.S. pharmaceutical supply chains. In 2024, the United States imported $212 billion in pharmaceutical goods, making them the fifth most imported product overall, according to the Kenan Institute at UNC.
Ireland is the largest single source of U.S. pharmaceutical imports, accounting for 19.8% of the total, according to the Atlantic Council. Germany supplies 10.8%, Switzerland 10.7%. India is the dominant source for active pharmaceutical ingredients — the raw chemical compounds that go into finished drugs — and China is now the fourth largest overall supplier of medicines to the United States.
Nearly three quarters of the raw ingredients that go into American medications come from overseas, according to ScienceInsights, primarily from India, China, Ireland, and other countries with lower production costs or favorable tax structures.
For Ireland specifically, the pharmaceutical tariff is a significant economic concern. Ireland hosts manufacturing facilities for many of the world's largest drugmakers — including Pfizer, Johnson and Johnson, and MSD — largely due to its low corporate tax rate and proximity to EU markets. Those companies' existing pricing deals with Washington currently shield them from the tariff, but the broader dynamic illustrates how the order could ripple through allied economies.
Industry Reaction: PhRMA Pushes Back
Not everyone in the industry is celebrating the deal structure. Stephen J. Ubl, CEO of PhRMA, the pharmaceutical company trade group, pushed back sharply on Thursday.
Ubl said taxes "on cutting-edge medicines will increase costs and could jeopardize billions in U.S. investments." He noted that medicines sourced from other countries "overwhelmingly come from reliable U.S. allies," and pointed to America's already substantial domestic biopharmaceutical manufacturing footprint as evidence that the supply chain is not as vulnerable as the national security framing implies.
The concern from the industry is not just about the companies that haven't signed deals. It is also about the signal the order sends about the durability of the deals that have been signed. The current exemptions are described as lasting three years for participating companies. What happens after three years is not addressed in the order, and PhRMA has raised concern about that uncertainty as a barrier to long-term domestic investment planning.
The Metal Tariff Update That Came With It
Thursday's pharmaceutical executive order was accompanied by a second order updating how tariffs are calculated on imported steel, aluminum, and copper. Beginning Monday, tariff rates on those metals will be calculated based on the full customs value of what U.S. customers pay when buying foreign metal, rather than on a narrower calculation that some importers had used to reduce their effective tariff burden.
Products made entirely of steel, aluminum, or copper continue to face a 50% tariff for most countries. But the administration also changed the rules for derivative metals, meaning finished goods that contain some of these metals but are not made entirely of them.
For products where metal amounts to less than 15% of total weight — such as a metal cap on a perfume bottle — only country-specific tariff rates will now apply. For products with more significant metal content, such as a largely steel washing machine, a 25% tariff will apply to the full customs value.
The administration framed this update as a loophole closure, saying it would prevent importers from other countries from "escaping higher payments" through narrow accounting of derivative product content.
What Happens Next
The 120 and 180-day clocks start now. The administration has said it expects additional companies to announce reshoring plans and pricing deals before those deadlines arrive. The four drugmakers currently in active negotiations will be working against those windows.
The biosimilar and generic drug carveout deserves attention. The tariff applies only to patented pharmaceuticals and their active ingredients. Biosimilars and generics are exempt for at least one year, after which the administration says it will reassess. This limits the near-term reach of the order somewhat — generics account for roughly 90% of all prescriptions filled in the United States by volume, though a much smaller share of total drug spending by dollar value.
What the order actually does to drug prices at the pharmacy counter is an open question. The administration's stated goal is lower prices through the most favored nation pricing deals, not higher prices through tariffs. The tariff is a threat mechanism designed to push holdout companies toward deals — not a revenue tool. If every remaining company signs a pricing agreement in the next six months, the 100% tariff may never actually hit a single shipment. Whether that outcome would actually lower out-of-pocket costs for patients depends on the specific terms of those deals, which vary by company and drug.
The pharmaceutical tariff is, structurally, a negotiating tactic written into law. The administration has used the threat to extract 13 signed pricing agreements and 4 more in progress. Now it is setting a deadline. The question is not whether the 100% tariff is real — it is. The question is how many drugmakers will sign before the clock runs out, and whether the resulting price agreements will actually reach patients.