U.S. Imposes 15% Tariff on Pharmaceuticals from Korea and Others... Biosimilars Exempt for One Year

White House Imposes 100% Tariff on Patented Pharmaceuticals and Raw Materials
15% Tariff Applied to Countries with U.S. Trade Agreements

The United States has decided to impose a 15% tariff on pharmaceuticals produced in trade agreement countries such as South Korea and the European Union (EU).

The Ministry of Trade, Industry and Energy announced on April 3 that the White House had issued a proclamation on April 2 (local time) to impose tariffs on pharmaceuticals and raw materials based on Section 232 of the Trade Expansion Act, aiming to strengthen U.S. national security and public health.

A 100% tariff will be imposed on patented pharmaceuticals and raw materials. For certain large corporations specified in the proclamation, the tariff will take effect from July 31, 120 days later, and for others, it will be implemented from September 29, 180 days later.

However, a 15% tariff will be applied to pharmaceuticals produced in trade agreement countries such as South Korea, the EU, Japan, Switzerland, and Liechtenstein, while an even lower tariff will be applied to pharmaceuticals from the United Kingdom.

Additionally, an exception has been announced that allows tariff reductions if companies sign price and U.S. domestic production agreements with the U.S. government. If a company signs a price agreement with the U.S. Department of Health and Human Services and a U.S. domestic production agreement with the Department of Commerce, no tariffs will be imposed until January 20, 2029. If only a domestic production agreement is signed with the Department of Commerce, a 20% tariff will be applied.

Generic drugs, biosimilars, and related raw materials will not be subject to tariffs, with a review scheduled after one year. Special pharmaceuticals, such as treatments for rare diseases and veterinary medicines, will be exempt from tariffs if they are produced in trade agreement countries or meet urgent public health needs.

The Korean government previously submitted an official opinion to the U.S. in May of last year and has actively worked to minimize the impact on domestic industries, including holding meetings with pharmaceutical exporters. In particular, through last year’s Korea-U.S. tariff agreement, both sides agreed to ensure that the Section 232 tariff on Korean pharmaceuticals would not exceed 15%.

An official from the Ministry of Trade, Industry and Energy stated, “This Section 232 tariff measure on pharmaceuticals will be imposed at 15% in accordance with the Korea-U.S. tariff agreement, so no disadvantageous conditions have been applied compared to major competitors. For biosimilars, which are a key export item to the U.S., the tariff exemption for one year will limit short-term impacts on exports.”

The government plans to continuously monitor the impact of changes in U.S. tariffs on domestic industries and will closely consult with the U.S. to maintain a balance of interests according to the existing Korea-U.S. tariff agreement and to ensure that Korean products are not placed at a disadvantage compared to those of other major countries, even in the event of further U.S. tariff actions under Section 301 of the Trade Act.

This content was produced with the assistance of AI translation services.