The Trump Administration issued a notice on Monday titled, “Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Pharmaceuticals and Pharmaceutical Ingredients,” which could serve as a precursor to imposing tariffs on the pharmaceuticals sector.
Under Section 232 of the Trade Expansion Act of 1962 (Section 232), the President may impose restrictions on certain imports if the Department of Commerce (DOC) determines that those restrictions are necessary on national security grounds. Notably, the announcement states that the investigation commenced on April 1, which may indicate an expedited timeline for a decision on whether and when to impose tariffs. The notice appeared in today’s Federal Register.
Below, we provide context to this process. This investigation provides a short window – 21 days – for any member of the public to submit comments, so it is important for companies that want to share their views to act quickly to begin formulating comments.
President Donald Trump’s authority under Section 232
The notice emphasizes the Trump Administration’s intent “to determine the effects on the national security of imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, and key starting materials, and derivative products of those items.” However, unlike the tariffs issued on April 2, under the International Emergency Economic Powers Act (IEEPA), which gives the President broad powers to address national emergencies through trade restrictions, a Section 232 investigation requires time to process and impose tariffs.
As noted above, Section 232 authorizes the President to impose restrictions on certain imports based on an affirmative determination by the DOC that the targeted products being imported into the US threaten to impair national security. The Secretary of Commerce has 270 days from the date of initiation to complete the report.
Upon receipt of the Secretary’s report, the President then has up to 90 days to determine whether to implement the recommendations suggested in the report, take other actions, or take no action. If the President concludes that the report indicates national security risks regarding the imports in question, he then decides how to remove the threat from said imports. While tariffs are not the required remedy, they have been President Trump’s preferred action when imposing Section 232 remedies and he has been clear in public comments about his intent to impose tariffs on pharmaceuticals. Within 30 days of his decision, the President must file a written statement with Congress explaining his action or inaction.
President Trump’s history with Section 232 tariffs and what comes next
The first Trump Administration oversaw the initiation of eight Section 232 investigations. In the cases of steel, aluminum, and automobile exports, President Trump relied on findings in Section 232 investigations from his first term to expand those tariffs in the current term. By contrast, when he announced action on copper, timber, and lumber earlier this year, new investigations were ordered, similar to the White House’s actions on Monday regarding pharmaceutical products. The time necessary to conduct the investigation also gives the Trump Administration the opportunity to negotiate trade deals with the affected countries and to secure potential commitments to increase US manufacturing by the affected companies. Those efforts may inform the final decision on what tariffs to impose.
Opportunities to impact the process
Public comment
One of the most consequential ways for companies to inform the Trump Administration of their operations and the implications of potential remedies is to comment in the public process, which will run for just 21 days.
In accordance with Part 705 of the National Security Industrial Base Regulations, the notice announces an opportunity for the public to comment on the investigation. Per the text of the notice, the most impactful comments will address the following topics:
- The current and projected demand for pharmaceuticals and pharmaceutical ingredients in the US
- The extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand
- The role of foreign supply chains, particularly of major exporters, in meeting US demand for pharmaceuticals and pharmaceutical ingredients
- The concentration of US imports of pharmaceuticals and pharmaceutical ingredients from a small number of suppliers and the associated risks
- The impact of foreign government subsidies and predatory trade practices on the competitiveness of the US pharmaceuticals industry
- The economic impact of artificially suppressed prices of pharmaceuticals and pharmaceutical ingredients due to foreign unfair trade practices and state-sponsored overproduction
- The potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over pharmaceuticals supplies
- The feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance
- The impact of current trade policies on domestic production of pharmaceuticals and pharmaceutical ingredients, and whether additional measures, including tariffs or quotas, are necessary to protect national security, and
- Any other relevant factors.
In the past, the DOC has held public hearings, but a hearing is not required by law, and the DOC so far has not held hearings in Section 232 investigations during the current Trump Administration. DLA Piper will closely monitor communications in case a public hearing is announced.
Exclusion requests
Although the Department has not yet indicated that there will be an exclusions process, there have been exclusions processes in the past for Section 232 tariffs, and it is possible that an exclusions process will emerge in the pharmaceuticals investigation assuming the Department imposes tariffs.
If an exclusions process is announced, it will include criteria for requestors to address.
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