Commerce Defines Specialty Drugs Eligible for Zero Section 232 Tariff

Classification7 min read

Executive Summary

Commerce identifies specialty pharmaceutical categories that may qualify for the zero Section 232 rate through a listed framework jurisdiction or a Commerce finding of urgent U.S. health need.

Companies may seek urgent-need approval by emailing BIS. Each application may cover one product and must include specified product, importer, manufacturer, and health-need information.

The notice corrects the Proclamation 11020 annexes, including by adding a heading that adds zero to the applicable duty rate for certain non-commercial uses, effective September 29, 2026.

The document is scheduled for Federal Register publication on September 23, 2026. The notice does not give a timeline for Commerce review.

The Bureau of Industry and Security (BIS) has issued a public-inspection notice that is scheduled for Federal Register publication on September 23, 2026. The notice identifies specialty pharmaceutical products that may qualify for the zero tariff authorized by Presidential Proclamation 11020, names eligible jurisdictions, and sets out how companies may seek approval based on urgent U.S. health need.

The notice also makes technical corrections to the Proclamation 11020 annexes. Companies may begin submitting urgent-need requests on the notice’s publication date. The corrections apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after September 29, 2026.

Which Drugs Qualify for the Section 232 Zero Rate?

The covered categories are drugs for which all approved indications are designated as orphan; nuclear medicines; plasma-derived therapies; fertility drugs; cell therapy products; gene therapy products; antibody drug conjugates; medical countermeasures related to chemical, biological, radiological, and nuclear threats; and animal health products. Commerce may identify additional specialty products. These definitions apply only to eligibility under Proclamation 11020. They cover investigational drugs as well as FDA-approved or FDA-authorized drugs, and Commerce may modify them.

Animal health products cover veterinary pharmaceuticals and certain biologics regulated by the USDA Center for Veterinary Biologics, but not devices or combination products for animals. To qualify as a covered orphan drug, the drug itself must be designated under section 526 of the Federal Food, Drug, and Cosmetic Act for one or more rare diseases or conditions, and every approved indication must be for such diseases or conditions.

There are two paths to the zero rate. A covered product may qualify if it is a product of a jurisdiction with a current or forthcoming trade and security framework agreement. The notice names Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, India, Indonesia, Japan, Jordan, Malaysia, North Macedonia, the Republic of Korea, Switzerland and Liechtenstein, Taiwan, Thailand, the United Kingdom, and Vietnam. Commerce may publish changes to that list.

The other path is a Commerce determination, made in consultation with the U.S. Trade Representative and the Department of Health and Human Services, that the product meets an urgent U.S. health need. Commerce will consider each request individually and on its facts. A product’s inclusion in a specialty category does not, by itself, make it eligible for the zero rate.

How Do Companies Request Section 232 Urgent-Need Approval?

Companies may request approval by emailing BIS at pharma232@bis.doc.gov. BIS will accept submissions on an ongoing basis starting on the notice’s Federal Register publication date. There is no closing date in the notice. Each application may cover only one specific product.

The application should give the company’s full legal name and address, along with the authorized representative’s name, title, and contact information. Product details should include the HTSUS classification, 10-digit if possible; advertised name and brand or, where applicable, the Investigational New Drug Application number; active ingredient or combination of active ingredients; requested category; country of origin and country of export for each classification; Importer of Record names and numbers; and manufacturer name and address.

The request should explain how the import meets an urgent U.S. health need. Possible supporting information identified in the notice includes the disease treated, the availability or lack of alternative therapies, the number of U.S. patients who use the product, and whether the product is available in other jurisdictions. Requests are limited to patented pharmaceutical products and associated ingredients covered by the HTSUS codes in Annex I of Proclamation 11020.

Commerce may seek additional documentation or clarification, and will notify companies of its decisions in writing. Commerce will send relevant request information to CBP. CBP administers the tariff adjustment at entry summary filing and may ask for additional documentation. Commerce states that it will protect submitted confidential, trade-secret, and proprietary information to the fullest extent allowed by law.

How Does the Zero Rate Fit With Other Section 232 Rates?

Proclamation 11020 establishes a 100 percent baseline rate on covered patented pharmaceuticals and associated ingredients listed in Annex I. The rate took effect July 31, 2026, for companies listed in Annex III, and will take effect September 29, 2026, for other companies. The proclamation sets lower rates for certain jurisdictions: 15 percent for products of Japan, the European Union, the Republic of Korea, and Switzerland and Liechtenstein, and 10 percent for products of the United Kingdom. The United Kingdom rate falls to zero only to the extent required by a future U.S. and United Kingdom agreement on pharmaceutical pricing, which Commerce would announce by Federal Register notice.

Companies with Commerce-approved onshoring plans may separately qualify for a 20 percent rate. The proclamation says that rate increases to 100 percent on April 2, 2030. Companies eligible for that treatment that also have an MFN pharmaceutical pricing agreement with HHS may receive a zero rate until January 20, 2029. The onshoring notice describes this company-specific process and requested applications by June 12, 2026. These processes are separate from the specialty-product routes in the new notice.

For covered products, the proclamation says the Section 232 tariff and applicable Column 1 duty generally combine to equal the applicable rate under the proclamation, unless the Column 1 duty is higher. This rule does not apply to the United Kingdom treatment. If more than one proclamation rate applies, the lowest rate applies. Generic pharmaceuticals and associated ingredients, including biosimilars, are not subject to Section 232 tariffs at this time. U.S.-origin pharmaceutical products are also not subject to these tariffs at this time.

What HTSUS Corrections Take Effect on September 29?

The notice makes five technical corrections to Annex I and one to Annex IV. In Annex I, it revises the definition of generic pharmaceutical articles to include unpatented animal health products. It also updates the listed HTSUS provisions to reflect changes made by the Committee for the Statistical Annotation of Tariff Schedules on July 1, 2026.

The corrected definition of “pharmaceutical articles” covers only imported articles classifiable in the provisions enumerated in subdivision (c) of U.S. note 40. It includes finished pharmaceutical products and active pharmaceutical ingredients, including key starting materials for those ingredients, when used to make finished pharmaceutical products. Inactive ingredients and excipients are excluded.

The correction to heading 9903.04.69 applies to entries classifiable under those enumerated provisions that are either not “pharmaceutical articles” or are pharmaceutical articles that are neither patented pharmaceutical articles nor generic pharmaceutical articles. The new heading 9903.04.70 covers pharmaceutical articles and associated ingredients provided for in subdivision (c) of U.S. note 40 that are solely for clinical trials, research and development, or other non-commercial applications. It adds zero to the duty provided in the applicable subheading. It does not waive that underlying duty.

The Annex IV correction removes classifications 2937.23.50, 3002.13.00, 3002.14.00, 3002.15.00, and 3004.49.00 to correct overlap with Annex I.

How Should Pharma Importers Prepare for the Zero Rate?

Start by mapping the portfolio. Sort patented products and ingredients in Annex I by category and origin. A product in a listed category from a listed jurisdiction takes the framework route. Any other product in a listed category needs an urgent-need determination before it can reach zero.

Prepare a separate request for each product. Each application covers one product and calls for its classification, origin and export country, importer of record names and numbers, manufacturer details, and health-need case. Submissions open on publication, so companies can have a request ready to send on September 23.

Revise broker instructions before September 29. The corrected annex provisions and the new heading 9903.04.70 for clinical trial, research and non-commercial goods apply to entries from that date. That is also when the 100 percent rate reaches companies not listed in Annex III.

Keep the decision letter with the entry file. Commerce will notify companies of decisions in writing and send request information to CBP. CBP may request documentation at entry summary filing.

When Does the Section 232 Specialty Drug Zero Rate Apply?

  • September 23, 2026, scheduled publication date: The public-inspection notice is scheduled for publication in the Federal Register. Urgent-need submissions begin on the publication date.
  • September 29, 2026, effective date: The corrected HTSUS provisions apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time.
  • July 31, 2026, effective date: The 100 percent Section 232 rate took effect for companies listed in Annex III.
  • June 12, 2026, requested application deadline: The onshoring notice requested applications by this date.
  • January 20, 2029, zero-rate end date: The proclamation’s specified zero rate for qualifying onshoring companies with an HHS MFN agreement runs until this date.

What Has Commerce Not Settled on Specialty Drugs?

The notice gives no timeline for Commerce review or for a decision. It also does not prescribe a standard set of documents for CBP validation at entry summary filing, or explain how importers should document the framework-jurisdiction route at entry.

Commerce may seek clarification, revise the definitions, and publish changes to the eligible-jurisdiction list. The notice also leaves “other specialty products” for the Secretary to identify, so the category list is a floor for now, not a closed set.

Sources

This publication is for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. Reading it does not create, and receipt of it does not constitute, an attorney-client relationship. Readers should not act on this information without seeking advice from qualified counsel. The views expressed are those of this site and its owner as of the date of publication. Although we try to keep this content complete, accurate and up to date, we assume no responsibility for its completeness, accuracy or timeliness.

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