Supreme Court Strikes Down Trump IEEPA Tariffs; Section 232 Pharma Duties Remain

A 6-3 Supreme Court decision rejected unlimited presidential tariff authority under the International Emergency Economic Powers Act (IEEPA), constraining "mega-tariffs" and broad reciprocal actions but not automatically touching national-security trade tools. The ruling struck down IEEPA tariffs, but pharmaceutical duties under Section 232 persist as they fall outside the ruling's scope.

Most high-profile pharmaceutical tariffs discussed in 2025 were intended to be imposed under Section 232 of the Trade Expansion Act, rather than IEEPA. In spring 2025, the Department of Commerce launched a Section 232 investigation into pharmaceutical imports and ingredients to assess potential national-security risks. President Trump subsequently announced plans for a 100% tariff on branded or patented pharmaceutical products specifically linked to that investigation.

The Supreme Court's ruling against IEEPA primarily affects mega-tariffs and global reciprocal actions, while pharmaceutical-specific measures grounded in national-security authority remain potentially in force. Section 232 tariffs on steel and aluminum are separate and remain in place even after this decision. Negotiated exceptions and trade agreements with the UK and EU were designed to shape how Section 232 duties on drugs would be applied, distinct from the broader emergency powers recently curtailed. This means that while some broad import taxes are gone, the targeted investigations into the pharmaceutical supply chain have not been directly invalidated.

The tariffs have caused the industry pivot toward domestic manufacturing, which has accelerated global trade tensions. Major developers have already committed billions to reshoring to mitigate potential duties and ensure supply chain resilience.

This massive reallocation of capital responds to an invest-or-tariff ultimatum, where high taxes could be avoided by beginning US facility construction. This is a vital shift, as 90% of biotech firms rely on imported components for at least half of their approved products. High costs have already squeezed profit margins, forcing some companies to delay R&D. While the court decision limits broad emergency taxes, onshoring continues to provide benefits like improved quality control and reduced miscommunication. Manufacturers are now prioritizing trade compliance and supplier diversification to balance domestic capacity with flexibility. The industry continues to advocate for stable policies to protect critical inputs like APIs and excipients. By investing in domestic R&D and localized APIs, firms aim to strengthen medicine supply security for the future.