The White House marked the first anniversary of its April 2, 2025, “Liberation Day” tariff announcements by introducing new Section 232 tariffs on patented pharmaceuticals and associated inputs—with exceptions for specific firms and countries—and changes to the Section 232 derivative tariffs on steel, aluminum, and copper that will raise costs for some firms but lower them for some.
Tariffs on Medicines: As outlined in an April 2 fact sheet and proclamation, the new Section 232 tariff will be set at 100% for patented pharmaceuticals and associated pharmaceutical ingredients, entering into effect “in 120 days for certain large companies, and 180 days for smaller companies.” However, a range of exceptions and qualifiers apply:
No Duties for Dealmakers: The fact sheet notes that for “companies that enter into Most Favored Nation (MFN) pricing agreements with the Department of Health and Human Services (HHS) and onshoring agreements with the Department of Commerce, a 0% tariff will apply through January 20, 2029.” The administration indicates it may waive tariffs for companies engaging in good faith negotiations toward these two classes of agreements. Companies that only enter into onshoring agreements will face a 20% tariff.
Country Deals, Too: A reduced tariff rate of 15% will apply for products imported from the European Union, Japan, Korea, or Switzerland and Liechtenstein; a separate agreement reached this week with the UK appears to offer duty-free treatment.
Exceptions Listed: Many medicines will be spared new tariffs, including generics, biosimilars, orphan drugs, nuclear medicines, plasma derived therapies, fertility treatments, cell and gene therapies, pharmaceuticals for animal health, and others.
Emphasis on the Carveouts: Recognizing the risk that tariffs will drive up medicine costs for American consumers, U.S. Trade Representative Jamieson Greer told the press: “It’s less what’s the tariff level and it’s more all of the actual deals we’ve been making with countries and companies to make sure that the supply chains are secure and we’re making them here in America.”
Tariffs on Metals: As outlined in an April 2 fact sheet and proclamation, the existing 50% tariff on steel, aluminum, and copper will remain while changes are introduced in the treatment of derivatives—that is, manufactured goods that contain these metals (listed in Annex I of the proclamation). The move is expected to raise tariff costs for some firms and reduce them for others.
Three Tiers: Going forward, the 50% rate will apply for derivatives that are entirely or almost entirely made of these three metals; a 25% rate will apply for derivatives where these metals represent more than 15% by weight; and no tariff will apply for products whose metals content is below that 15% weight threshold.
Rate Down, Bills Up?
While the tariff on many derivatives will be reduced from 50% to 25%, it will now apply to the full value of the product rather than solely the metal content. While simplifying an onerous and ill-explained compliance task, many companies expect this change will raise their tariff bills.
Industrial, Electrical Equipment: In what appears to be an expansion in scope, industrial equipment, robots, and electrical equipment will now pay a 15% tariff through 2027 (rising to 25% in 2028) “to accelerate the massive industrial base buildout currently underway across the United States,” according to the fact sheet. This marks a significant and potentially painful development for U.S. manufacturing and badly needed investments in U.S. electricity production.
Inclusions Process Scrapped: Offering possible relief from future tariffs, the proclamation terminates the “inclusions process” for steel, aluminum, and copper derivatives, marking a win for the U.S. Chamber and its members, who have advocated for this change and others for months. While the proclamation authorizes USTR and Commerce to include additional derivatives on a rolling basis, pressure from industry and from foreign governments appears to have tamped down interest in continual expansion of the universe of tariffed goods.
And Some Carveouts: As noted, the Section 232 metals tariffs no longer apply to products for which steel, aluminum, and copper constitute less than 15% of their value. This de minimis exception may represent relief for a fairly large range of products. In addition, an esoteric list of goods now excluded entirely from the Section 232 duties appears in Annex II, including milk and cream products, shampoo, helium, bakeware, and parts for cribs.
Sourece: www.uschamber.com
