Procedures for pharmaceutical companies to apply for onshoring agreements to obtain reduced Section 232 tariff rates

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) today released a notice announcing the procedures for companies that manufacture pharmaceutical products to apply for company-specific onshoring agreements, which would make them eligible for a reduced Section 232 tariff rate for imports of their pharmaceutical products and ingredients.

Background

The president on April 2, 2026, issued Proclamation 11020, which determined that imports of pharmaceuticals and their ingredients threaten to impair national security and imposed a 100% ad valorem tariff to adjust imports of certain patented pharmaceuticals and associated ingredients, effective September 29, 2026. The proclamation authorizes the Secretary of Commerce to enter into agreements with companies that commit to onshoring their manufacturing operations.

Reduced tariffs and application process

Companies with approved onshoring plans will be eligible for a reduced duty rate of 20%. This rate will be further reduced to 0% until January 20, 2029, for companies that also secure Most Favored Nation (MFN) pricing agreements with the U.S. Department of Health and Human Services (HHS).

To apply for approval of onshoring plans, companies must submit relevant information within 30 days of the notice's publication in the Federal Register, which is scheduled to be May 13, 2026. The application requires comprehensive information, including:

• Details on the company's organization and ownership
• The total new investment to be made in the United States between January 20, 2025, and January 20, 2029
• A commitment detailing which products will be onshored
• Projections of the percentage of U.S. and global sales that will be U.S.-made by 2029
• Investment and production milestones
• A list of products for which preferential tariff treatment is requested.

All onshoring plans are subject to approval, monitoring, and enforcement by Commerce.