The U.S. tariff landscape has shifted dramatically in 2026, and healthcare is caught in the middle. From a landmark Supreme Court ruling to new duties on branded drugs, the policy environment has moved fast and shows no signs of settling.
Here is where things stand and what health system leaders should monitor:
1. 100% tariff on branded drugs takes effect July 31
President Donald Trump imposed a 100% tariff on patented pharmaceutical products and their ingredients in an April 2 announcement, following a Section 232 investigation that found pharmaceutical imports threaten U.S. national security by increasing reliance on foreign supply chains. The White House said the policy has already driven about $400 billion in new investment commitments from pharmaceutical manufacturers. The tariff takes effect July 31 for large drugmakers and Sept. 29 for smaller companies. Unlike Section 122, tariffs imposed under Section 232 remain in effect indefinitely absent further action.
However, the rollout carries significant carve-outs. Seventeen major drugmakers, including Eli Lilly, Pfizer and Novo Nordisk, have signed most-favored-nation pricing agreements with HHS and committed to domestic manufacturing, and face no tariff through January 2029. Companies that have pledged to onshore production but have not finalized deals face a 20% rate, and orphan drugs, cell and gene therapies, animal health products and other specialty categories remain exempt under specific conditions. Products from the European Union, Japan, South Korea, Switzerland and Liechtenstein also face a reduced 15% rate.
2. Generic drugs get a three-year tariff schedule
Generics and biosimilars were exempted under the April policy, with the White House pledging to reassess that exemption within a year. President Trump has since replaced that open-ended review with a defined schedule. Generic drugs will continue entering the U.S. tariff-free starting Aug. 1 for a two-year period, after which the tariff rises to 100% for one year, then to 200% thereafter. President Trump described the escalating structure as a penalty meant to push companies toward building domestic manufacturing within the two-year window, and said the policy on branded and patented drugs “will remain as is.”
3. Section 122 tariff has expired and been replaced
Duties ranging from roughly 10% to 12.5% took effect July 24 on imports from more than 80 nations, replacing the flat 10% tariff President Trump had imposed under Section 122 of the Trade Act of 1974 in February.
On Feb. 20, the Supreme Court ruled 6-3 that President Trump exceeded his authority by invoking tariffs under the International Emergency Economic Powers Act. The law permits presidents to regulate economic activities following the declaration of a national emergency. The decision put billions in collected tariff revenue at risk of refunds and marked the most significant legal check on the administration’s trade agenda to date. It also complicated the picture for drug imports specifically, since the ruling limited the administration’s use of emergency tariff powers but left Section 232 authority intact, allowing the pharmaceutical-specific tariffs to move forward. The administration opened a refund portal in April through which businesses can file claims for duties already paid under the invalidated authority. That process remains ongoing.
Within 24 hours of the ruling, President Trump imposed the 10% Section 122 tariff on virtually all imports, a separate legal authority that permits temporary duties of up to 15% for 150 days to address balance of payments problems. It took effect Feb. 24 and expired, on schedule, July 24.
Rather than relying on the emergency powers authority the Supreme Court had rejected, the administration cited Section 301 of the Trade Act of 1974 for the tariffs that replaced it, arguing that many countries fail to adequately enforce their own bans on goods made with forced labor. The new tariffs exclude oil and gas, certain natural resources, goods already covered under the USMCA, and products already subject to separate national security tariffs on items like cars and steel. The administration is also investigating a further round of Section 301 tariffs targeting 15 additional countries plus the EU, this time over manufacturing practices deemed unfair.
The rollout follows a July 20 move imposing an additional 50% tariff on Canadian motor vehicles, alcoholic beverages and dairy products, set to take effect Aug. 19 under Section 338 of the Tariff Act of 1930, a rarely used authority the administration has called a last resort.
5. Medical device and PPE tariffs remain an open question
There has also been a broader push by USTR to extend duties to 60 additional economies over forced-labor enforcement gaps. USTR opened those investigations March 12, and a June 2 Federal Register notice found that 54 of the 60 economies lack a forced-labor import prohibition entirely, while the other six have a prohibition on the books but were found not to be enforcing it.
USTR proposed a two-tier structure, with economies that have some form of prohibition or a related commitment under a reciprocal trade agreement facing a 10% duty and all others facing 12.5%. Public hearings began July 7. This is the investigation that produced the Section 301 duties described above, which took effect the same moment Section 122 expired July 24.
6. What’s at stake for health systems
Healthcare’s import exposure remains substantial. The American Hospital Association’s 2026 Environmental Scan found hospitals imported more than $75 billion in medical devices and supplies in 2024, with China as the primary source for items such as respirators, masks and gloves. Unlike branded pharma companies, which have largely negotiated their way around the steepest drug tariffs, device and supply manufacturers operate on thinner margins and are less positioned to absorb new duties, and pre-negotiated contracts make it difficult for providers to pass rising costs along until the next budget cycle.
Meanwhile, Vizient’s latest Spend Management Outlook, released in July, forecasts pharmaceutical prices rising 3.35% in 2026, though the report notes tariff costs were not factored into that projection, meaning the actual increase could run higher once the new drug and device duties work through the supply chain.
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