Drug APIs Exempt from New Tariffs; No Exemptions for Medical Devices

The latest round of U.S. tariffs provides important relief for pharmaceutical manufacturers but leaves much of the medical technology sector exposed to additional import costs.

On July 23, the Office of the U.S. Trade Representative (USTR) announced new Section 301 tariffs on products from 60 trading partners, citing their failure to prohibit or effectively enforce bans on goods produced with forced labor. The duties took effect July 24 and generally range from 10% to 12.5%, depending on the exporting country and its existing trade commitments with the United States. According to the USTR announcement, the action covers trading partners responsible for approximately 99% of U.S. imports.

The final tariff notice exempts numerous pharmaceuticals and pharmaceutical ingredients, including many active pharmaceutical ingredients (APIs). USTR said commenters demonstrated that these products support U.S. manufacturing, often cannot be obtained domestically in sufficient quantities, and serve health-related purposes similar to products already proposed for exclusion. The exemption reduces the risk that tariffs on essential inputs could raise drug-production costs or further disrupt already-fragile pharmaceutical supply chains.

Medical devices did not receive a comparable, industry-wide exemption. Although device manufacturers and health-sector organizations warned that tariffs could increase costs, limit product availability, and create supply-chain disruptions, most medical devices remain subject to the new duties. The tariffs may affect finished devices as well as imported components, subassemblies, manufacturing inputs, and specialized equipment.

Some narrower exceptions remain. Certain United Kingdom-origin medical technologies are exempt under country-specific provisions, and products already subject to Section 232 tariffs are outside the new Section 301 action. Consequently, tariff treatment will depend on a product’s Harmonized Tariff Schedule classification, country of origin, applicable trade agreement, and inclusion in the final exemption annexes.  

For Michigan life sciences companies, the distinction creates markedly different operating conditions. Pharmaceutical manufacturers importing covered APIs may benefit from continued tariff-free access, while medical device companies could face higher costs that are difficult to absorb or pass through—particularly under fixed-price purchasing agreements and reimbursement systems that do not automatically adjust for tariffs.

Companies should review their product classifications and countries of origin, confirm whether individual products qualify for an exemption, and evaluate potential effects on supplier contracts, inventory, pricing, and sourcing strategies. Because shifting production or suppliers for an FDA-regulated product can require validation, regulatory submissions, and substantial lead time, immediate alternatives may be limited.

Medical technology organizations like AdvaMed continue to advocate for broader relief, including a reciprocal “zero-for-zero” tariff model for lifesaving medical products, i.e., tariff-free trade helps protect patient access, supply-chain stability, and continued investment in medical innovation.

MichBio will continue monitoring implementation of the tariffs, changes to the exemption lists, and their effects on Michigan’s pharmaceutical, biotechnology, medical device, diagnostic, and healthcare communities.