Tariff Talk

Pharmaceuticals are now under the microscope of the Trump Administration. Earlier this month, the Commerce Department’s Bureau of Industry and Security (BIS) launched Section 232 investigations into both the pharmaceutical and semiconductor sectors. The official notice appeared in today’s Federal Register, with the public comment period set to close on May 7 (21 days from publication).

Section 232 of the Trade Expansion Act of 1962 authorizes the president to impose tariffs or other trade restrictions if imports are found to threaten national security. The International Trade Commission (ITC) monitors and reports on such threats and their impact on trade.

The pharmaceutical investigation aims to assess the national security risks associated with reliance on foreign supply chains for pharmaceuticals, their ingredients, and derivative products. This includes both generic and non-generic finished drug products, medical countermeasures, and related items. National security concerns center on pricing vulnerabilities and the potential for foreign governments to weaponize pharmaceuticals through export controls.

Each Section 232 investigation concludes with a report and recommendation submitted to the president within 270 days of initiation. The report will include a policy review, public comment input, and potentially hearings with industry experts and other agencies, such as the Department of Defense. This report will guide efforts to strengthen domestic pharmaceutical manufacturing through investments in labor, facilities, supplies, and production timelines. Once the report is issued, the president has 90 days to take action—either through new duties and proposed regulations or by reporting to Congress why no action will be taken. If action is taken, tariffs are typically implemented within 15 days of the executive order.

Semiconductors and semiconductor manufacturing equipment were also placed under investigation this month. Other open investigations include copper (and related products) and timber and lumber, which were initiated on March 10. Among the most well-known concluded 232 cases are those on steel and aluminum, which resulted in 25% tariffs.