On 13 May 2026, the United States (US) Department of Commerce (Commerce) published a Federal Register notice that establishes procedures for pharmaceutical companies to apply for company-specific agreements to onshore manufacturing of patented pharmaceutical products and related ingredients. Notably, applications for these agreements must be submitted within 30 days of the Federal Register publication, with a stated deadline of 12 June 2026, and must include detailed information on investments, production plans and compliance commitments.

Background

The notice implements provisions of Presidential Proclamation 11020, issued on 2 April 2026, which determined that imports of certain pharmaceuticals and pharmaceutical ingredients threaten to impair US national security. The Proclamation imposed tariffs of up to 100% ad valorem on certain patented pharmaceutical products and associated ingredients, effective 29 September 2026, for companies not otherwise exempted.

Proclamation 11020 also authorized Commerce to enter company-specific onshoring agreements with pharmaceutical manufacturers. Companies with approved agreements may qualify for reduced tariff rates, including a 20% duty rate, or 0% through 20 January 2029 if the company also enters into a Most Favored Nation (MFN) pricing agreement with the US Department of Health and Human Services (HHS).

For more on Proclamation 11020, see EY Global Tax Alert, US Section 232 proclamation imposes up to 100% tariffs on patented pharmaceuticals and active pharmaceutical ingredients, dated 3 April 2026.

Application process and required information

Companies seeking to enter into an onshoring agreement must submit applications electronically to pharma232@bis.doc.gov by 12 June 2026, using forms available on the Bureau of Industry and Security's Section 232 investigations webpage.

Applications must include comprehensive supporting information across five sections, including:

• Corporate information, such as ownership structure, manufacturing footprint and product portfolio
• Total planned US investment for the period 2025 through 2029, including capital expenditures
• Onshoring commitments, detailing the products, volumes and timelines for shifting production to the United States
• US production metrics, including current and projected shares of US and global sales produced domestically
• Investment commitments, including:
• Planned expenditures
• Production milestones
• Ongoing reporting obligations (see "Compliance, monitoring and enforcement," below)
• Product-level import data (Annex B), including Harmonized Tariff Schedule of the United States (HTSUS) classifications, manufacturing locations and importer information

Applications must also include a certification by a senior officer confirming accuracy under penalty of perjury and acknowledging program limitations.

Review and approval process

Commerce will evaluate applications on a company and fact-specific basis, with no defined timeline for reaching a decision. During the review process, Commerce may request additional information or propose modifications to the application. Approved applicants will be notified in writing, and relevant import data will be shared with US Customs and Border Protection (CBP) to administer the applicable tariff adjustments.

Compliance, monitoring and enforcement

Approved companies will be subject to ongoing oversight, including:

• Audited semiannual progress reports to Commerce
• Monitoring of compliance with onshoring commitments
• Potential audits or additional documentation requirements

Noncompliance risks include:

• Reinstatement of Section 232 tariffs both prospectively and retroactively
• Additional penalties where permitted by law

Limitations on preferential treatment

Preferential tariff treatment, if granted, is limited only to products specified in the approved application and approved importers identified by the manufacturer. Furthermore, the preferential treatment does not extend to products acquired after 2 April 2026 and licenses products not primarily developed by the applicant and products from acquired companies following 2 April 2026.

What this means for businesses

The notice provides a pathway for pharmaceutical companies to mitigate the impact of significant Section 232 tariffs by committing to US-based manufacturing.

However, participation requires:

• Significant capital investment
• Detailed, multi-year onshoring plans
• Ongoing compliance and reporting commitments

Given the short application window and the approaching effective date of tariffs, affected companies should act quickly to evaluate whether to participate in the program.

Actions to consider

Companies affected by Proclamation 11020 should consider:

• Assessing eligibility for an onshoring agreement and potential tariff savings
• Developing detailed onshoring strategies, including investment and production timelines
• Compiling required data and documentation across product portfolios and supply chains
• Evaluating most-favored-nation agreement opportunities with HHS to achieve zero-duty treatment
• Establishing internal compliance and reporting processes
• Monitoring implementation guidance from Commerce and US Customs and Border Protection