2026 saw the life sciences and healthcare industry in the aftermath of a profound political and economic shift. Immediately upon entry into office in January 2025, President Trump signed an Executive Order to withdraw from the World Health Organisation. This process was formalised a year later, on 22 January 2026. This is a highly symbolic decision that went well beyond public health governance. It demonstrated a broader policy direction: a renewed focus on national interest and an explicit questioning of the value of global institutions that the US had helped build, fund and lead for decades.
Next to this, under President Trump, lowering pharmaceutical prices in the US became a central political objective. The Administration has consistently argued that US consumers effectively subsidise global pharmaceutical markets, while other mature economies benefit from government-controlled pricing mechanisms that constrain reimbursement levels.
This repositioning has not been confined to healthcare policy and global institutions. The use of tariffs as an economic and geopolitical tool, has been a dominant instrument in the policies set out by the Trump administration.
The trade policy function has been reshaped by this narrative. Tariffs are no longer merely economic instruments, they are increasingly deployed as tools to rebalance perceived inequities in pricing and market access. From this perspective, imposing duties on imported pharmaceuticals is not simply a revenue measure, but part of a broader strategy to encourage domestic production and exert downward pressure on US prices.
This directly impacts the way pharmaceuticals and medical products move across borders. For an industry long built on global cooperation, regulatory convergence and largely duty-free trade, 2025 marked a structural break with the past. In 2026, companies are now operating in the new reality created by that break.
For pharmaceutical and healthcare companies, this has undermined assumptions embedded in supply chains, pricing strategies and long-term investment models. Products that historically entered the US without duty are now potentially exposed to tariffs at short notice. Therefore, trade policy has shifted from a peripheral technical topic to a core business variable.
1 Section 232: Damocles’ sword above the healthcare industry
Since Liberation Day on 2 April, the potential imposition of duties under Section 232 of the Trade Expansion Act has remained a persistent risk. Under this act, industry specific tariffs can be imposed for national security reasons following an investigation by the Department of Commerce. Although no tariffs have yet been enacted to date and most pharmaceutical products are still excluded from reciprocal tariffs, the uncertainty itself has proven destabilising.
For companies in the industry, it remains unclear if duties will apply at some point and what the exact scope and tariff rate would be. Following the Supreme Court decision cancelling the IEEPA based tariffs, the US Administration had to change course and shifted to a general additional tariff of 10% under section 122 (valid for a period of 150 days) and launched further investigation under other sections (section 301).
Although pharmaceutical products are, in principle, exempted due to the ongoing section 232 investigation, it also raises questions on the alignment with existing trade agreements—such as the rates of 15% for products from the EU or Japan—or whether far higher rates could be imposed. In the most extreme scenarios, duties could reach levels approaching 100 percent unless companies commit to substantial manufacturing or construction activity in the United States as announced in President Trump’s post back in September 2025.
Following this post, no tariff has been imposed by the targeted date of 1 October 2025, but several companies have publicly announced agreements or investment commitments with the Administration. Yet the legal framework underpinning these arrangements remains opaque. It is unclear whether they are anchored in enforceable legal instruments or reflect political understandings without lasting legal effect. This ambiguity makes it difficult for businesses to treat them as reliable risk-mitigation mechanisms.
The result is a policy environment in which strategic decisions must be taken without certainty as to the governing rules.
2 A return to customs fundamentals
Historically, the life sciences sector has concentrated overwhelmingly on regulatory compliance. Good manufacturing practice, pharmacovigilance, clinical oversight and serialisation have dominated compliance agendas. Customs, by contrast, was often viewed as a technical formality, largely because duties on pharmaceuticals were minimal or non-existent.
That balance has now shifted. In response, companies are revisiting the foundations of their trade models.
Product classification has become commercially important. Many healthcare products defy simple categorisation because they combine multiple active ingredients, incorporate devices or are sold as kits. A change in classification can produce a meaningful difference in duty exposure. What was once an interpretative exercise has become a financial risk driver.
Companies are reassessing product classifications to confirm whether goods remain covered by exclusions from the tariff actions imposed by any of the Executive Orders or section 232 investigations; and whether alternative classifications or exemptions may apply. Binding rulings are increasingly used as strategic risk-management tools rather than mere administrative confirmations.
Rules of origin are even more complex. Pharmaceutical production typically spans several jurisdictions, with API synthesis, formulation, fill-and-finish and packaging occurring in different countries. Moreover, origin is defined differently depending on legal context. Regulatory origin, preferential origin under trade agreements and non-preferential origin for trade remedies can all point to different results. The divergence between, for instance, US and EU origin rules further compounds the challenge. A product considered 'EU origin' in Europe may not qualify as such under US law.
As a result, companies are reviewing origin strategies, including prioritising different API sources for the US market, relocating manufacturing steps to achieve specific origin outcomes and sustaining dual-origin supply chains—one for the US and another for other markets.
Customs valuation introduces additional pressure. Transfer prices in the pharmaceutical sector are commonly fully loaded with royalties, service fees and R&D allocations. When duties were zero, this model had limited impact. In a tariff environment, however, it can systematically inflate duty liability. Customs valuation focuses on the value of the imported goods themselves, not the full operational setup of an integrated group model.
This why a lot of companies are re-evaluating valuation structures. Many organisations are exploring the possibility of unbundling nondutiable elements from customs value or if the 'first sale for export' principle can be applied where goods are sold through multi-tier supply chains. With this principle, it is possible to go back to an earlier sale in a chain of transactions under certain strict provisions, thus effectively carving out (part of) the margin of the middleman. This represents a significant shift from traditional pharmaceutical transfer-pricing practice. Historically, companies have focused on aligning pricing with tax and regulatory requirements, not customs optimisation. Adopting a first sale approach could require a fundamental redesign of contractual flows, pricing logic and documentation standards.
With these changes strongly impacting the organisation, they should not be treated as a local US optimisation exercise only. First sale changes how value is allocated across the supply chain and, therefore, must fit into a coherent global operating model. If applied in isolation, it risks creating inconsistencies with tax positions, regulatory filings and financial reporting. However, if embedded into a broader global vision, it can provide a sustainable framework that reconciles customs efficiency with transfer pricing and regulatory alignment.
Compounding these challenges is the absence of strong US legal precedents specific to the pharmaceutical and healthcare industry. With few court decisions offering guidance, companies must operate with limited jurisprudential benchmarks. The legal framework itself can also be subject to change, even though concepts might have been accepted for decades. An example of this is the "Last Sale Valuation Act", a recent bipartisan proposal to eliminate the First Sale Rule. Although it is still a proposal, it adds still further uncertainty for companies.
What unites these responses is that they are not tactical fixes. Each requires legal analysis, operational redesign and long-term governance.
3 Why documentation and governance matter more than ever
Short-term reactions should be limited to 'no-regret moves' that can withstand regulatory scrutiny. In a volatile environment, durable structures are required. That means clearly documented classification methodologies, origin determinations supported by manufacturing data and valuation models that reconcile customs and tax requirements.
It also means scenario planning. Companies must be able to model the impact of different duty outcomes and adapt sourcing, pricing and distribution strategies accordingly. Therefore, customs has moved from a technical discipline to a strategic capability.
For companies, trade policy is no longer background context. It shapes cost structures, supply-chain design and market access strategies. Those that invest in mastering classification, origin and valuation—within a coherent global framework—will be better positioned to protect margins, ensure continuity of patient supply and respond to future policy shifts.
2025 marked the turning point.
2026 marks the year in which the industry must learn to operate under the new rules.
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