Strengthening America’s biopharma manufacturing base and biotechnology leadership are goals both BIO and the Trump administration share. But as companies work to advance those aims and navigate the Section 232 pharmaceutical tariff framework, the Department of Commerce has issued no additional guidance on tariff implementation or exempted products, leaving biotechnology companies increasingly uncertain about the impact of Section 232 tariffs as the deadline for implementation moves closer.
On May 13, Commerce released a Federal Register Notice (FRN) outlining how manufacturers can apply for company‑specific “onshoring agreements” that can reduce tariff burdens under the recent Presidential Proclamation, “Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States.” These agreements will determine whether a company faces tariff rates as high as 100% on certain imported pharmaceutical products or qualifies for reduced rates of 20%—or 0% for companies that also have a Most Favored Nation (MFN) pricing deal.
Commerce is requiring companies to submit onshoring plan applications by June 12. With that deadline fast approaching, companies have a narrow window to prepare applications. Yet key questions regarding eligibility, scope, and implementation of these agreements remain unresolved. Below are several areas where greater clarity is needed.
Which products will be exempt?
Perhaps the most pressing question biotech companies need answered: Which products will be subject to tariffs, and which will qualify for exemptions?
The FRN doesn’t provide any additional guidance on exemptions under the recent Presidential Proclamation. As a result, companies are being asked to submit detailed information about their products, sourcing, and supply chains without certainty about which products are even in scope. For many firms, this uncertainty could compound the burden of compiling documentation to submit to Commerce.
That would be a significant operational challenge under any timeline. But with applications due this week, it could be especially difficult. Companies are also considering concerns about the transmission and handling of potentially large volumes of business-sensitive information.
How will tariffs apply to complex supply chains?
The FRN implies that input materials for patented pharmaceuticals will be subject to tariffs—regardless of whether those inputs are themselves patented. But it offers little clarity on how tariffs will apply when patented and non-patented products share the same manufacturing inputs, or when imported ingredients flow across multiple products with different regulatory or tariff classifications.
Most biotech companies don’t manufacture a single product in a single facility using a single set of inputs. They operate across interconnected global supply chains involving multiple suppliers, manufacturing partners, and production stages spanning different countries.
Commerce’s current framework leaves these companies with no clear roadmap for how to account for that complexity.
How are pre‑commercial biotech products impacted?
The FRN doesn’t clarify whether pre‑commercial products—or the ingredients used to develop them—will be subject to tariffs. Finished pre-commercial drug products may be exempt under the Harmonized Tariff Schedule of the United States. But the input materials purchased commercially to develop and manufacture those products in the United States may still be subject to tariffs. This potential exposure disproportionately impacts U.S.-based innovators, with particularly serious implications for emerging biotech companies.
Smaller biotech firms often spend years conducting research, running clinical trials, and navigating the FDA approval process before earning revenue. They rely heavily on outside investment and typically operate with limited cash reserves—about 35% of biotech firms currently have less than a year’s worth of cash on hand. Without clarity on tariff exposure, these companies cannot reliably plan manufacturing strategies, attract investors, or assess the viability of developing new therapies.
What counts as an onshoring commitment?
Commerce has yet to clearly define what constitutes a “successful onshoring commitment.” Furthermore, the administration hasn’t clarified the inclusion of questions regarding MFN pricing deals in applications for onshoring agreements.
Without more explicit guidance, companies are forced to guess what constitutes a sufficient investment. Smaller innovators with extremely limited capital are unsure whether purchasing new equipment for a contract manufacturing partner qualifies. Meanwhile, established companies with significant existing domestic footprints are left wondering what additional benchmarks are required to secure the same tariff relief offered to those building their first domestic facilities.
Can companies realistically meet the timeline?
Building new or modernizing existing biopharma manufacturing facilities is a complex, lengthy process. BIO members consistently report that shifting contract manufacturing facilities—which are relied upon by nearly 90% of biotechnology companies—can take up to eight years for approved medicines. Constructing new facilities can cost up to $2 billion and require 5-10 years to complete. Even routine manufacturing transitions require extensive regulatory review.
Yet companies are now being asked to submit detailed onshoring plans within 30 days—while major implementation questions remain unanswered.
The Bottom Line
U.S. biotechnology companies are facing major business, investment, and supply chain decisions as the June 12 deadline rapidly approaches—and ongoing uncertainty isn’t conducive to innovation.
BIO will continue engaging with the administration and Congress to develop policies that strengthen the domestic biopharma manufacturing base in a strategic, sustainable way and support the innovators working to bring new therapies to patients.
