The Department of Commerce’s Bureau of Industry and Security has published the procedures for companies that manufacture patented pharmaceutical products to apply for company-specific agreements with the DOC to onshore manufacturing of pharmaceutical products and their ingredients. Companies that enter into such agreements are eligible for a reduced Section 232 duty rate for imports of their pharmaceutical products and associated ingredients. Companies are requested to submit applications by June 12.
President Trump issued a proclamation April 2 imposing Section 232 tariffs on imports of patented pharmaceuticals and their ingredients. This includes, among other actions, a 100 percent tariff to be imposed on patented pharmaceuticals and associated pharmaceutical ingredients identified in Annex I of the proclamation, as well as a 20 percent tariff to be imposed on patented pharmaceuticals and APIs produced by companies that have plans approved by the DOC to onshore production of such (this tariff rate will increase to 100 percent on April 2, 2030). This preferential 20 percent tariff will be reduced to zero until Jan. 20, 2029, for those companies that also enter into most-favored nation deals with the Department of Health and Human Services.
BIS has now unveiled the criteria for company-specific agreements for the tariff adjustment onshoring program, including the application process, documentation and certification requirements, and eligibility conditions. Required application information includes organization information, total investment and investment commitment details, onshoring commitment details, percentage of U.S. and global sales produced in the U.S., planned pharmaceutical production investments, and details for products for which preferential treatment is being requested (including such information as HTSUS code, advertised name and brand, active ingredient(s), country of origin, importer of record, and exporter name and address).
BIS may request supplemental documentation or clarification and will make an individual fact- and company-specific decision for each applicant. There is no time limit for BIS decisions. Approved applicants will be notified in writing of approval and relevant information will be transmitted to U.S. Customs and Border Protection, which will administer the tariff adjustment at the time of entry summary filing and may request additional documentation to validate entries.
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