Pharmaceutical tariffs, and why generics were left out

On April 2, 2026, President Trump signed Proclamation 11020¹, which put a 100 percent tariff on imported patented medicines and the ingredients used to make them. Paragraph 11 of the same document set aside the drugs that fill most American prescriptions. “I have further determined not to adjust imports of generic pharmaceuticals and their associated ingredients, including biosimilar products, at this time,” it reads.

By Sept. 29, 2026, the full tariff applied to most importers. Generics remain outside it. A Commerce Department notice published Sept. 23, 2026², restated that the Section 232 pharmaceutical tariffs “do not apply to generic pharmaceutical products and associated ingredients.”

The exemption matters because generics are the cheapest, thinnest-margin part of the drug supply and the part most prone to shortages. The GxRadar generic price index stood at 47.4 in October 2026 (January 2014 = 100), meaning a basket of common generics cost pharmacies about 53 percent less than it did in January 2014. A review due in April 2027 could still bring generics into scope.

What Section 232 lets a president do

Section 232 of the Trade Expansion Act of 1962 lets the president “adjust the imports” of a product that the Commerce Department finds is being imported in ways that threaten to impair national security. The statute⁵ gives Commerce 270 days from the start of an investigation to report, gives the president 90 days after receiving the report to decide, and requires any action to begin within 15 days of that decision.

Commerce opened the pharmaceutical investigation on April 1, 2025, according to the Federal Register notice⁴ that invited public comment through May 7, 2025. The stated scope covered “both finished generic and non-generic drug products,” along with medical countermeasures, active pharmaceutical ingredients (APIs) and key starting materials. Generics were inside the investigation from the start.

Drugs had largely been spared from the broader tariffs that came first. A White House fact sheet⁶ on the April 2025 “reciprocal” tariffs listed pharmaceuticals among the goods not subject to them. When the president imposed a 10 percent temporary import surcharge in February 2026 under a different law, section 122 of the Trade Act of 1974, Proclamation 11012⁷ again excepted “pharmaceuticals and pharmaceutical ingredients.”

The rate schedule in Proclamation 11020

Printed in the Federal Register on April 9, 2026, the proclamation rests on Commerce's finding that patented drugs are heavily import-dependent. It cites FDA figures that, as of 2025, about 53 percent of patented pharmaceutical products distributed in the US were produced abroad, and that only 15 percent of patented APIs by volume were made domestically for the US market. The rate any product pays depends on who makes it and where.

Timing came in two steps. Under clause 4 of the proclamation¹, the duties applied from 12:01 a.m. on July 31, 2026, for companies listed in its Annex III, and from Sept. 29, 2026, for everyone else. Commerce published the application process³ for company onshoring agreements on May 13, 2026, asking applicants to file by June 12 and to report new US investment planned between Jan. 20, 2025, and Jan. 20, 2029. If the government concludes a company misled it about onshoring commitments, the proclamation lets Commerce reimpose the tariffs on that company retroactively.

Two smaller rules apply across the board. Drawback (a refund of duties on goods later exported) is available, and when more than one rate could apply to a product, the lowest one wins.

How the tariff code defines a generic

Because the exemption lives in the Harmonized Tariff Schedule, the word “generic” now carries a customs definition. The September 2026 notice² rewrote it so that a “generic pharmaceutical article” is an API or other component used in a drug or biosimilar “approved pursuant to a qualifying application,” a finished drug or biosimilar approved or licensed under such an application, “or an unpatented animal health product.” The proclamation itself describes innovative drugs as those “typically patented and branded,” and contrasts them with generics approved under section 505(j) of the Food, Drug, and Cosmetic Act, the abbreviated new drug application (ANDA) route.

That notice also spelled out the zero-rate specialty categories and opened a process for companies to ask Commerce to treat specific imports as meeting “an urgent U.S. health need.” It also added a zero-rate tariff heading for products imported solely for clinical trials, research and development, or other noncommercial use.

On a pharmacy shelf, the practical effect is narrow. A generic tablet approved through an ANDA, and the API inside it, enter without the Section 232 duty. A brand product still under patent may pay it, depending on its maker's agreements and its country of origin. GxRadar's guide to how a generic drug gets approved covers the ANDA route, and the Orange Book explainer shows where brand-drug patents are listed.

Why generics were treated differently

Beyond saying generics “should not be subject to section 232 tariffs at this time,” the proclamation offers little reasoning for the exemption. It does say the decision covers generic drugs and ingredients bought for the Strategic API Reserve, a stockpile that an August 2025 executive order⁸ directed HHS to stock with a six-month supply of APIs for about 26 critical drugs.

Federal reports point to the economics. FDA's 2019 drug shortage task force report⁹ found that 67 percent of the 163 drugs that went into shortage between 2013 and 2017 had a generic version on the market. It named a “Lack of Incentives to Produce Less Profitable Drugs” as the first root cause, and said makers of older generics “face intense price competition, uncertain revenue streams, and high investment requirements.” A duty on a product that already sells for cents would come out of that same margin.

FDA's shortage list showed 69 drugs in current shortage as of Oct. 30, 2026, according to openFDA shortage data¹¹ compiled on GxRadar's shortage tracker. The reasons behind those listings are covered in why drug shortages happen.

Generic supply chains are also heavily foreign at the ingredient level. In October 2019 congressional testimony¹⁰, FDA said that as of August 2019 only 28 percent of the facilities making APIs for the US market were in the US, with 13 percent in China and the rest elsewhere (GxRadar looks at that piece of the chain in China's role in drug ingredients). GxRadar's piece on where drug ingredients come from goes further into those figures.

What to watch through 2027

The exemption is conditional. Clause 5 of Proclamation 11020¹ directs the Commerce secretary, within one year, to inform the president of “any circumstances that, in the Secretary's opinion, might indicate the need to take action to adjust the imports of generic pharmaceuticals and their associated ingredients.” That year runs out on April 2, 2027. Clause 14 separately orders Commerce to keep monitoring imports of both patented and generic drugs.

Other dates sit on the patented side. The 20 percent rate for companies with onshoring plans steps up to 100 percent on April 2, 2030, and the zero rate tied to most-favored-nation pricing agreements lasts until Jan. 20, 2029. Under clause 3(f), any increase has to be announced in a Federal Register notice, which is where a change to the generic exemption would surface first. The wider federal push to build drug manufacturing at home is covered in GxRadar's onshoring explainer.