The Supreme Court’s Feb. 20 ruling against President Donald Trump’s use of emergency powers to impose tariffs marked a major legal setback, but it is not a full reprieve for hospital leaders and pharmaceutical manufacturers navigating global supply chains.
In a 6-3 decision, the court blocked the administration’s use of the International Emergency Economic Powers Act to levy sweeping reciprocal duties, including a 34% tariff on Chinese imports and penalties on goods from Canada and Mexico. The ruling curbs the president’s ability to act unilaterally in peacetime under the IEEPA. a statute traditionally used for sanctions and asset freezes during national emergencies. However, it does not affect tariffs enacted under a separate legal authority that remains active: Section 232 of the Trade Expansion Act of 1962.
That distinction matters for drugmakers and hospital leaders. While many of the administration’s 2025 tariffs were invalidated, pharmaceutical-specific measures tied to the president’s national security authority under the Trade Expansion Act remain on the table.
Here are three key questions that remain for healthcare executives:
1. Will drug costs fall in the near term?
The Supreme Court ruling places more than $175 billion in tariff collections at risk of refunds. In theory, unwinding broad reciprocal duties could ease cost pressure on medical devices and pharmaceutical components.
However, pricing relief may not be immediate.
Many generic drugs depend on overseas active pharmaceutical ingredient manufacturing. Data shows generics rely primarily on India (35%) and China (27%) for their active ingredients, while the U.S. accounts for only 12% of generic drug production. Existing supply contracts, distributor pricing structures and inventory already in circulation could delay any downstream effect on hospital pharmacy budgets.
President Trump also issued a temporary 10% global tariff under Section 122 of the Trade Act of 1974 hours after the ruling, underscoring continued volatility in import policy.
2. Could pharma tariffs still be imposed under Section 232?
Section 232 allows the president to impose tariffs if imports are deemed a threat to national security. Most pharmaceutical tariffs discussed in 2025 were tied to this authority rather than the IEEPA.
The Commerce Department launched a Section 232 investigation into pharmaceutical imports and active ingredients in 2025, and President Trump has floated a 100% tariff on branded or patented medicines linked to that review.
If the Commerce Department’s investigation concludes that reliance on foreign drug manufacturing poses a national security risk, the administration could move forward with targeted pharmaceutical duties. That process likely would take months, prolonging uncertainty for manufacturers, suppliers and providers.
Importantly, Section 232 tariffs on steel and aluminum remain in place, reinforcing that national security-based trade tools were not affected by the Supreme Court’s ruling.
3. What should health systems watch now?
For now, trade policy remains fluid.
Generic drugmakers operate on thin margins and are particularly sensitive to cost increases tied to imported ingredients and finished products. Tariffs layered onto those imports could further strain profitability and, in some cases, exacerbate shortages if manufacturers exit unprofitable lines.
For hospitals, that could translate into higher acquisition costs or renewed supply disruptions, particularly for widely used injectable generics and antibiotics that already face periodic shortages.
Health systems with heavy reliance on imported drugs and devices may reassess sourcing strategies, group purchasing contracts and inventory management plans. Pharmacy leaders and CFOs should monitor the Commerce Department’s Section 232 findings, supplier earnings guidance and contract language tied to tariff contingencies.
While the Supreme Court narrowed one pathway for sweeping tariffs, it did not eliminate the administration’s broader trade authority — or the cost uncertainty facing hospital pharmacy budgets.
