The US Supreme Court is set to hear oral arguments on November 5, 2025, in a case examining the legal authority of the current Administration to impose tariffs under the International Emergency Economic Powers Act, which was used to impose reciprocal tariffs on a country-by-country basis. What may be next?

Evolving US trade policy takes another turn
Evolving US tariff/trade policy took another turn this week (September 17, 2025) when the US Supreme Court reported that it would hear oral arguments on November 5, 2025, in a case examining the legal authority of the current Administration to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which was used to impose reciprocal tariffs on a country-by-country basis.

The Trump Administration first laid out a plan for imposing reciprocal tariffs in February (February 2025) to counter non-reciprocal trading arrangements with US trading partners and to improve US competitiveness, including in manufacturing. Those reciprocal tariffs were scheduled to go into effect on April 9, 2025, but the Administration placed a 90-day pause (until July 9, 2025) on their implementation to enable countries to negotiate these tariffs with the US government. The US government then extended the deadline again, to August 1, 2025, except for certain countries, which were sent letters from the White House that specified their tariffs, as the US government continued to negotiate individual deals with its trading partners. Since that time, the US has struck deals/framework agreements with key trading partners of particular relevance to the pharmaceutical industry, including the European Union, the UK, Switzerland, and Japan, and has ongoing negotiations with China and India as it continues to refine those agreements.

IEEPA provides the President broad authority to regulate a variety of economic transactions following a declaration of a national emergency. In 2025, President Donald Trump issued a series of executive orders imposing tariffs on most US imports under IEEPA and other statutory authority. This initially included certain tariffs on China, Canada, and Mexico in February 2025. Later a baseline tariff of 10% on almost all US trading partners was imposed as well as higher country-specific reciprocal tariffs, according to an analysis by the Congressional Research Service, with modifications to these tariffs several times. IEEPA was also later used to impose separate tariffs on Brazil, India, and other countries.

On September 9, 2025, the US Supreme Court decided to hear an appeal from the Trump Administration over rulings by lower courts that held that IEEPA does not give the President legal authority to impose tariffs. This week (September 17, 2025), the US Supreme Court placed the case on its calendar for November 5, 2025, to begin oral arguments, the first step in the Supreme Court’s review. Until the Supreme Court renders a decision, for now, the tariffs remain in place.

Pharma industry-specific tariffs: where they stand
Aside from the broader issue of tariffs under IEEPA, another issue still looming for the pharma industry is whether the US government will proceed with imposing pharmaceutical-industry-specific tariffs. The groundwork for potential industry-specific tariffs was laid earlier this year (April 1, 2025), when the US Department of Commerce initiated an investigation to determine the effects on US national security of imports of pharmaceuticals and pharmaceutical ingredients. This includes both finished generic and non-generic drug products, medical countermeasures, critical inputs, such as active pharmaceutical ingredients (APIs) and key starting materials, and derivative products of those items.

The statutory authority for such an investigation comes under separate statutory authority than IEEPA, from Section 232 of the Trade Expansion Act of 1962, as amended, which allows the President to impose import restrictions based on an investigation and affirmative determination by the US Department of Commerce that certain imports threaten to impair US national security. The Bureau of Industry and Security at the US Commerce Department conducts the investigation. In general, a Section 232 investigation considers the following (1) existing domestic production of the product; (2) future capacity needs; (3) manpower, raw materials, production equipment, facilities, and other supplies needed to meet projected national defense requirements; (4) growth requirements, including the investment, exploration, and development to meet them; and (5) any other relevant factors.

A Section 232 investigation does not necessarily result in the imposition of tariffs, but the findings of the investigation are reported to the President. The Commerce Secretary’s report to the President is prepared within 270 days of initiation of the investigation. For the Section 232 investigation into pharmaceuticals, such a report would be required no later than December 27, 2025, based on the initiation of the investigation on April 1, 2025 although there has been some signaling by the Administration that such findings could be reported earlier.

Under a Section 232 investigation, the President can concur or not with the Commerce Secretary’s recommendations, and take action to “adjust the imports of an article and its derivatives” or other non-trade related actions as deemed necessary. If the Commerce Secretary determines that there is no threat to U.S. national security, no further action is taken. If the Commerce Secretary determines that there is such a threat, the President has up to 90 days to decide (1) whether to concur with Commerce’s determination; and (2) if concurring, whether to act. If the President opts to act, then the nature and duration of the action shall be specified, and the President has 15 days to implement that action. Within 30 days after deciding whether or not to take action, the President must submit a written statement to Congress providing the reasons for that decision.

Pharmaceuticals are but one area in which Section 232 investigations have been initiated thus far in 2025. There have been a total of 10 active Section 232 investigations initiated thus far in 2025 (through August 13, 2025), according to information from the Bureau of Industry and Security, US Department of Commerce. In addition to pharmaceuticals and their ingredients, other Section 232 investigations initiated in 2025 included those for copper, timber and lumber, semiconductors and semiconductor manufacturing agreements, processed critical minerals and derivative products, commercial aircraft and jet engines, polysilicon and its derivatives, unmanned aircraft systems and their parts and components, and wind turbines. Also, Section 232 investigations have been used to impose tariffs on automobiles, auto parts, steel and aluminum and their derivatives.

The US Department of Commerce provided public notice in the Federal Register of its Section 232 investigation into pharmaceuticals in April (April 2025) and requested public comment by May 7, 2025. In all, 967 comments were received from 311 entities (individuals, organizations, and companies). Chief among them were comments from industry trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents innovator drug companies in the US, and the Association for Accessible Medicines (AAM), which represents generic and biosimilar producers in the US, both of which oppose the imposition of pharmaceutical-industry-specific tariffs.

The notice identified several issues on which the US Department of Commerce was especially interested in gaining feedback on as outlined below:

US pharmaceutical demand. The current and projected demand for pharmaceuticals and pharmaceutical ingredients in the United States;

US domestic pharmaceutical production. The extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand;

Foreign pharmaceutical supply chains. The role of foreign supply chains, particularly of major exporters, in meeting US demand for pharmaceuticals and pharmaceutical ingredients;

US pharmaceutical imports. The concentration of US imports of pharmaceuticals and pharmaceutical ingredients from a small number of suppliers and the associated risks;

Impact of foreign trade policy on pharmaceuticals. The impact of foreign government subsidies and trade practices on US pharmaceuticals industry competitiveness;

Economic impact of foreign trade practices on pharmaceuticals. The economic impact of artificially suppressed prices of pharmaceuticals and pharmaceutical ingredients due to foreign unfair trade practices and state-sponsored overproduction;

Export restrictions on pharmaceuticals. The potential for export restrictions by foreign nations, including the ability of foreign nations to exercise control over pharmaceuticals supplies;

Feasibility on increasing US domestic manufacturing capacity. The feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance;

Impact of trade policy on US domestic production capacity. 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

Other factors. Any other relevant factors.