Do the 2026 pharma tariffs reach compounding APIs?

Current as of October 21, 2026. Next review: on any Commerce or CBP action on these tariffs.

The short version

Since September 29, 2026, Section 232 tariffs of up to 100 percent apply to patented drugs and their ingredients. Some countries and companies get lower rates, and generics are excluded for now.
The text does not settle whether bulk API for a still-patented molecule, such as semaglutide or tirzepatide, is covered when imported for compounding.
From July 31, 2026, patented pharmaceutical articles under headings 9903.04.60 to 9903.04.66 are exempt from the Section 301 duties. Those duties may still apply to other pharmaceutical articles under headings 9903.04.67 to 9903.04.70, unless another exemption in note 52 applies.

Paul’s take

For two years compounders have watched FDA. The next surprise may come from Customs. If your margin depends on an imported API, put the tariff question in your supplier agreement now. Who bears the duty? What happens if the classification changes? I’d like to hear what others are seeing at the border.

— Paul Albarrán

Do the 2026 pharmaceutical tariffs reach APIs used in compounding?

The 2026 Section 232 tariffs reach active pharmaceutical ingredients for patented drugs listed in FDA’s Orange Book or Purple Book. Whether bulk API imported to compound a still-patented molecule is covered is not settled by the text. Proclamation 11020 does not mention drug compounding. Neither do the three Commerce notices or the three CBP guidance messages that implement it.

What did Proclamation 11020 do?

The President signed Proclamation 11020 on April 2, 2026. It was published in the Federal Register on April 9, 2026, at 91 FR 18183. It rests on section 232 of the Trade Expansion Act of 1962, 19 U.S.C. 1862.

The President concurred with the Secretary of Commerce’s finding that imports of pharmaceuticals and pharmaceutical ingredients threaten to impair national security. Section 232 of the Trade Expansion Act lets the President adjust imports that the Secretary of Commerce finds threaten to impair national security.

The proclamation imposes duties on patented pharmaceuticals and associated ingredients, as identified in its first annex. That annex adds U.S. note 40 and new headings to chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). The note lists the covered HTSUS provisions, which fall in chapters 29 and 30.

What is a patented pharmaceutical article?

Note 40 defines the term. A patented pharmaceutical article is one subject to a valid, unexpired U.S. patent and listed in FDA’s Orange Book or Purple Book. The term also covers the active pharmaceutical ingredients and key starting materials for such articles.

FDA describes the Orange Book as identifying drug products approved on the basis of safety and effectiveness, with related patent and exclusivity information.

On September 23, 2026, the Bureau of Industry and Security published technical corrections to note 40. They took effect on September 29, 2026. As corrected, “pharmaceutical articles” are finished pharmaceutical products and their active pharmaceutical ingredients, including key starting materials. Inactive ingredients and excipients are not pharmaceutical articles.

What rates apply, and since when?

The tariffs took effect on July 31, 2026, for the 17 companies listed in Annex III. They took effect on September 29, 2026, for all other companies.

The rates in Proclamation 11020, as later adjusted, are:

100 percent for patented pharmaceutical articles generally, as a combined rate with the ordinary column 1 duty;
15 percent, also combined, for products of Japan, European Union member countries, South Korea, Switzerland and Liechtenstein;
zero for products of the United Kingdom, under a Commerce notice effective July 31, 2026, replacing the proclamation’s 10 percent;
20 percent for companies with onshoring plans approved by Commerce, rising to 100 percent on April 2, 2030;
zero until January 20, 2029, for companies that also have Most-Favored-Nation pricing agreements with the Department of Health and Human Services.

The 20 percent rate also covers companies that Commerce assesses are likely soon to have approved onshoring plans. The zero rate for pricing-agreement companies also applies to companies Commerce determines are likely to be eligible soon.

Annex II lists 13 company-specific agreements that Commerce entered into before the proclamation. If more than one rate applies, the lowest applicable rate applies.

A zero rate can also apply to listed specialty categories. Examples include nuclear medicines, cell and gene therapies, and drugs whose approved indications are all orphan. The specialty zero rate requires a determination by the Secretary of Commerce. The Secretary makes that determination in consultation with the Trade Representative and the Secretary of Health and Human Services. The Secretary must find that the product comes from an eligible jurisdiction or meets an urgent U.S. health need. Commerce listed the eligible jurisdictions in its September 23, 2026 notice.

The reduced onshoring rate has limits. Commerce’s May 13, 2026 notice says it applies to the applicant’s own branded products and associated ingredients. Unless Commerce approves otherwise, only importers the manufacturer identifies and Commerce approves may use it.

Are generic drugs and their ingredients covered?

No, not at this time. The proclamation states that generic pharmaceuticals and their associated ingredients are not subject to these tariffs at this time.

Note 40 defines generic pharmaceutical articles as FDA-approved articles and associated ingredients not subject to a valid, unexpired U.S. patent and off exclusivity. The definition ties them to products approved under qualifying applications, such as an abbreviated new drug application.

The exclusion may not last. Within a year of the proclamation, the Secretary of Commerce must inform the President of circumstances that might call for action on generics.

Is bulk API imported for compounding a patented molecule covered?

In short, the text does not settle whether bulk API imported to compound a still-patented molecule is covered.

The tariffs reach ingredients for patented drugs listed in FDA’s Orange Book or Purple Book. The text does not say whether API imported for compounding counts as one of those ingredients. Here is what the text does say:

“Pharmaceutical articles” include active pharmaceutical ingredients used to make finished pharmaceutical products.
“Patented pharmaceutical articles” include active ingredients “for such articles”.
Here, “such articles” means patented products listed in the Orange Book or Purple Book.
Since September 29, 2026, pharmaceutical articles that are neither patented nor generic, as defined, fall under heading 9903.04.69.
That heading carries no additional Section 232 duty.

Here is what the text does not say:

whether an ingredient imported to make a compounded drug is an ingredient “for” a listed article;
whether intended use decides that link;
into which category bulk API for compounding a still-patented molecule falls.

Classification is a separate step. The new headings apply only to articles classifiable in the HTSUS provisions that note 40 lists.

This article does not guess at an answer. CBP’s guidance names its Trade Remedy Branch for questions about Section 232 entry filing. Patent law and FDA’s compounding rules are separate questions that this article does not address.

Are there other zero-duty paths?

From September 29, 2026, heading 9903.04.70 applies to pharmaceutical articles solely for use in clinical trials, research and development, or other non-commercial applications. It carries no additional Section 232 duty.

Imports of United States-origin pharmaceutical products are not subject to these tariffs. Drawback is available for duties paid under the proclamation.

Do the July 2026 Section 301 tariffs also apply?

Separate tariffs under Section 301 of the Trade Act took effect on July 24, 2026, on all products of 60 economies, with exemptions. The rate is 10 percent for 17 listed economies, including Canada, Mexico and the United Kingdom. For European Union and Taiwan products, the Section 301 duty brings a lower ordinary duty up to 10 percent in total. For products of Japan, South Korea and Switzerland, the Section 301 duty brings a lower ordinary duty up to 12.5 percent. Products of the other economies face 12.5 percent.

The notice adds U.S. note 52 to the tariff schedule. With exceptions, note 52(a) subjects products owing Section 301 duties to other additional duties in subchapters III and IV of chapter 99. From July 31, 2026, note 52(f)(8) exempts patented pharmaceutical articles provided for in headings 9903.04.60 through 9903.04.66. That exemption lists only those headings.

Other exemptions are set by tariff provision, including many provisions in chapters 29 and 30. Some listed chemicals are exempt only when they are for use in pharmaceutical applications.

What could change next?

Several changes are built into the program. Commerce may raise rates if companies or foreign jurisdictions fail to meet their commitments. The Secretary of Commerce may identify other specialty pharmaceutical products for the conditional zero rate. The Secretary of Commerce must also continue to monitor imports of patented and generic pharmaceuticals and their ingredients.

The proclamation calls for Federal Register notices for rate increases and for changes to the HTSUS. CBP has issued three guidance messages so far, on July 30, August 1 and September 28, 2026. The September 28 message covers changes effective September 29, 2026. This article is reviewed on any such Commerce or CBP action.

The information on this site is general information, not legal advice.