Following our previous post here, we provide an update on the current developments in this area.
On April 2, 2025, the US administration announced reciprocal tariffs on all imports into the United States (see here). As it has been widely reported, pharmaceutical products were exempted from these tariffs whereas medical devices were not.
Subsequently, on April 9, 2025, the administration announced a 90-day postponement of the reciprocal tariffs for most countries except for China. For China, an additional 125% tariff was levied on products originating from China, soon raised to 145% in response to China’s decision, on April 12, to also impose 125% tariffs on US-origin goods imported into the country.
During the 90-day pause on the reciprocal tariffs, a baseline 10% tariff applies to all imports into the United States other than from China and with certain exemptions. Notably, pharmaceutical products and active pharmaceutical ingredients (APIs) listed in Annex II to the Executive Order (tariff heading 2903 onwards) remain excluded from these US tariffs, because it was stated that those goods would be subject to their own tariffs. President Trump has repeatedly warned of imminent and significant tariffs on pharmaceutical products with an aim to promote relocation of manufacturing operations to the US.
Finally, on April 16, the US Department of Commerce published a Notice on the opening of a national security investigation under Section 232 on imports of pharmaceuticals and pharmaceutical ingredients. According to the Notice, which is open for comments until May 7, 2025, the investigation will cover “finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items.” The investigation findings may lead to trade restrictions and the imposition of tariffs on pharmaceutical products and pharmaceutical ingredients. However, the precise details, including the scope, rates, and implementation timeline, have yet to be clarified, even though President Trump has stated on various occasions that the tariffs will be 25%, similar to the tariffs on other products subject to 232 tariffs, such as steel, aluminium, automobiles and auto parts.
As reported in our previous post, there are concerns that pharmaceutical tariffs could lead to higher costs and prices. However, on April 15, the White House published an Executive Order aimed at lowering prescription drug prices. Amongst other measures, the Order anticipates changes to Medicare’s negotiation program foreseen in the Inflation Reduction Act.
In the meantime, no exemption was granted by China with respect to US-origin pharmaceutical products imported into China. Albeit the impacted volumes may not be comparable, this situation still places pharmaceutical companies exporting to China with manufacturing capacity in the US in a very difficult position, causing unexpected cost increases and other commercial and operational challenges.
As a reminder, medical device companies do not benefit from the current pharmaceutical exemption and hence are facing the baseline 10% tariff that applies to all imports into the US, as well as the US tariffs imposed on China, Mexico and Canada, and the tariffs imposed by China against US-origin products. They could also be subject to future UK countermeasures, and the EU’s proposed additional package of retaliatory measures if and when it is implemented at the expiration of the 90-day suspension period, on July 14, 2025. A consultation is being held by the UK Government until 1 May. The EU also held a consultation, enabling industry associations to raise their concerns about the inclusion of medical devices and essential inputs in the list of products subject to potential countermeasures. They urged the European Commission to exempt these items from retaliatory tariffs, citing negative impacts on costs, access, and care quality for patients.
We are monitoring developments in the life sciences sector and can assist you in assessing how your operations might be impacted by these reciprocal tariffs, and how such impacts might be mitigated in this volatile business environment.
