On Might 11, 2026, the U.S. Division of Commerce revealed the procedures for firms to use for agreements with the U.S. authorities to scale back Part 232 tariffs on imported patented pharmaceutical merchandise by onshoring manufacturing.
Part 232 Background
On April 2, 2026, President Trump issued a proclamation imposing Part 232 tariffs on sure pharmaceutical merchandise imported into the USA. Part 232 authorizes the president to regulate imports to deal with nationwide safety threats. Within the proclamation, the President said that the U.S.’s reliance on imports of prescription drugs has created fragile provide chains, threatening nationwide safety.
President Trump imposed a 100% tariff on sure patented prescription drugs and their related substances. The tariffs will take impact for sure massive firms on July 31, 2026, and for small firms on September 29, 2026.
The proclamation additionally included a number of carveouts. For instance, Corporations which have entered into qualifying agreements with the US authorities and developed plans to onshore manufacturing of patented prescription drugs and related substances will likely be topic to solely a 20% tariff from September 29, 2026, via April 2, 2030.
Onshoring Settlement Software Course of
On Might 11, 2026, Commerce revealed procedures for firms to use for Onshoring Agreements that will qualify them for the decreased 20% tariff.
Functions should embrace:
Group Info: Full authorized title, tackle, possession construction, and useful possession, together with the nation the place the corporate’s headquarters is situated.
Complete Funding: The grand complete of latest investments to be made in the USA from January 20, 2025, to January 20, 2029.
Onshoring Dedication: A complete rationalization of what a part of the corporate’s current patented product portfolio it can onshore.
Share of U.S. and World Gross sales Produced in U.S.: The proportion of the corporate’s U.S. gross sales of patented prescription drugs whose APIs are produced in the USA as of January 20, 2025, and the anticipated share of its U.S. gross sales that will likely be U.S.-made as of January 20, 2029.
Funding Dedication:
An outline of what a part of its patented product portfolio the corporate proposes to not onshore
An announcement that it’s commercially unfeasible to onshore these merchandise, and a proof as to why that is the case.
The estimated hypothetical value to determine manufacturing services in the USA for these merchandise.
An announcement of the quantity that the corporate commits to spend on new brick-and-mortar services in the USA by January 20, 2029.
Funding and manufacturing milestones.
A dedication to submit audited experiences to Commerce a minimum of semiannually
An announcement of whether or not the corporate has entered into, or is pursuing, a Most Favored Nation Pricing Settlement with the HHS; and
A dedication to supply supporting data upon request by Commerce, whether or not earlier than or after getting into into the onshoring settlement.
Annex A—Deliberate Pharmaceutical Manufacturing Investments: This annex supplies a template for firms to submit the knowledge described above.
Annex B—Tariff Adjustment: On this annex, firms ought to present details about the merchandise for which they request preferential therapy, together with HTSUS codes, nation of origin, title, and tackle of exporters.
Certification: Functions shall embrace a certification, corresponding to a sworn assertion, from a senior officer of the corporate confirming that the submission is true, correct, and full to the most effective of the corporate’s data.
Functions and supporting documentation needs to be submitted to Commerce through e-mail at pharma232@bis.doc.gov by June 12, 2026.
Commerce Approval Course of
Commerce will overview every utility on a case-by-case foundation. The division could situation its approval on modifications to a proposed onshoring plan. There’s at the moment no deadline for Commerce to subject its selections. When an utility is accredited, the division will notify candidates in writing and transmit related data to CBP to manage the decreased tariff charge.
Concerns for Importers
Whereas the onshoring course of creates vital tariff financial savings alternatives, Commerce has made clear that the federal government will likely be strictly imposing the onshoring agreements. The discover said that if an organization engages in fraud or intentionally misleads the federal government concerning onshoring commitments, Commerce could topic the corporate’s merchandise to the 100% tariff prospectively and retroactively. Corporations may additionally face legal responsibility underneath different frameworks, such because the False Claims Act. With enforcement at an all-time excessive, firms should rigorously contemplate the commitments they make in functions for Onshoring Agreements.
Diaz Commerce Legislation has intensive expertise aiding importers with issues in entrance of the Division of Commerce. For help, get in contact with a member of our staff at 305-456-3830, data@diaztradelaw.com
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