U.S. President Donald Trump on the 2nd (local time) issued a proclamation under Section 232 of the Trade Expansion Act imposing tariffs of up to 100% on imported patented medicines and active pharmaceutical ingredients (APIs). Tariffs will take effect within 120 days for some large corporations and within 180 days for small corporations.
Under this measure, Korean patented medicines that previously faced no tariff will newly be subject to a 15% tariff, but biosimilars and generic medicines—Korea's key export items to the United States—will remain tariff-free for at least one year.
In addition, when medicines commissioned by a U.S. corporation are contract-manufactured in Korea (CDMO) and exported to the United States, they may be recognized as U.S.-made and thus potentially excluded from tariff application. However, this part requires the U.S. government's final determination.
The KoreaBio Association said, "This measure is expected to have a limited impact on Korea's pharmaceutical and biotech industry overall."
◇ 20% tariff applies to onshoring corporations… raised to 100% starting in 2030
According to the proclamation, the United States will generally impose a 100% tariff on patented medicines and related ingredients.
However, an exceptional 15% tariff applies to products manufactured in ▲ Korea ▲ the European Union ▲ Japan ▲ Switzerland ▲ Liechtenstein. Medicines from the United Kingdom are currently subject to a 10% tariff, which could be reduced to 0% if a future U.S.-U.K. medicine price agreement is concluded.
Corporations that have obtained approval from the Department of Commerce for plans to onshore production in the United States will face a 20% tariff. However, this rate is a temporary measure and is set to be raised to 100% starting Apr. 2, 2030.
The Department of Commerce may also retroactively apply tariffs or impose additional penalties if a corporation fails to fulfill its onshoring commitment.
Corporations that sign both a most-favored-nation (MFN) drug pricing agreement with the U.S. Department of Health and Human Services (HHS) and an onshoring contract will be subject to a 0% tariff until Jan. 20, 2029.
This measure may also apply to corporations where negotiations are underway or a principled agreement has been reached. Representative examples include ▲ AbbVie ▲ Amgen ▲ AstraZeneca ▲ Bristol Myers Squibb ▲ C. H. Boehringer Sohn AG & Co. KG ▲ Eli Lilly ▲ EMD Serono ▲ Genentech ▲ Gilead Sciences ▲ Merck (MSD) ▲ Novartis ▲ Novo Nordisk ▲ Sanofi.
◇ Generics and biosimilars will remain tariff-free for at least one year
Generic medicines, biosimilars, and related ingredients were excluded from this measure.
The U.S. government plans to conduct an additional review within one year and reassess whether to impose tariffs.
In addition, imports of generics related to the U.S. government's "Strategic API Reserve" are also included among duty-free items.
Specialty medicines will also be excluded from tariffs if certain conditions are met.
Representative categories include ▲ orphan drugs ▲ nuclear medicine (radiopharmaceuticals) ▲ plasma-derived therapies ▲ infertility treatments ▲ cell and gene therapies ▲ Antibody-Drug Conjugate (ADC) ▲ medical countermeasures for chemical, biological, radiological, and nuclear threats ▲ veterinary medicines.
These products will be exempt if they are manufactured in countries that have concluded trade and security framework agreements with the United States or if an urgent public health need is recognized in the United States.
◇ U.S.-made medicines are exempt from tariffs… corporations that re-export can receive refunds
Meanwhile, U.S.-made medicines are excluded from the tariffs announced this time.
In addition, even for products on which tariffs have been imposed, a tariff refund (drawback) is available if they are re-exported.
Depending on whether local U.S. production bases are secured, the future tariff impact may vary by domestic corporation.
Celltrion secured local production facilities last year by acquiring a plant from Eli Lilly. With additional expansion under review, some observers say the corporation could significantly reduce tariff risk in the mid to long term.
Samsung Biologics moved to respond last month by acquiring a manufacturing facility in the United States from GSK plc. The company is contract-manufacturing active pharmaceutical ingredients in Korea for some biosimilar products that Samsung Bioepis has received approval for in the United States.
Dong-A ST's Stelara biosimilar "IMULDOSA" is also being manufactured in Korea by its affiliate STgen Bio. Dong-A ST is said to be leaning toward building global partnerships rather than directly securing a local production base.