By: Chris Beckham
On April 16, the Trump Administration (Administration) initiated a national security investigation into pharmaceuticals and their ingredients under Section 232 of the Trade Expansion Act of 1962 (Section 232).[1] The investigation was initiated one day after President Trump’s executive order to lower drug prices, which called for “promot[ing] a more . . . resilient pharmaceutical value chain.”[2] To advance resiliency, the Administration aims to assess the potential weaponization of U.S. overreliance on foreign pharmaceutical ingredients and “the feasibility of increasing domestic capacity.”[3] The conclusion of the Section 232 investigation will grant vast regulatory discretion on pharmaceutical imports to the Executive,[4] giving weight to Trump’s 250% tariff threat on the industry and potentially disrupting pharmaceutical manufacturing in North Carolina’s Research Triangle.[5]
The Trade Expansion Act of 1962
Section 232 grants the Secretary of Commerce the authority to initiate an investigation into the national security threat of an import product, such as steel, and submit a report to the President with his or her findings and recommendations within 270 days.[6] The President then has 90 days to accept or deny the Secretary’s findings and “take action to adjust imports of an article and its derivatives,”[7] such as imposing license fees, quotas, or tariffs.[8]Further, the President is authorized to alter the imposed import adjustment at any point in the future if, in the President’s judgment, the adjustment “is not being carried out or is ineffective in eliminating the threat to national security.”[9]
Although the Constitution grants Congress—not the Executive—the power “To lay and collect . . . Imposts,”[10]Congress delegated that authority to the President within the confines of Section 232.[11] Until 2018, Section 232’s authority was rarely exercised.[12] However, the constitutionality of this delegation stands on firm ground. In the 1976 case Federal Energy Administration v. Algonquin SNG, Inc., the Supreme Court unanimously upheld Section 232’s delegation of authority to the President.[13] Additionally, in the 1988 case U.S. Cane Sugar Refiners Association v. Block, the former U.S. Court of Customs and Patent Appeals held that the President’s discretion in adjusting imports is “immune from judicial scrutiny” as long as Section 232’s procedures are followed.[14]
As a result, the potential Section 232 tariffs on pharmaceuticals have a stronger legal foundation than the Administration’s reciprocal tariffs imposed under the International Emergency Economic Powers Act, which the U.S. Court of Appeals for the Federal Circuit struck down on August 29, 2025.[15] The longevity of Trump’s 2018 Section 232 tariffs on aluminum and steel imports reflects this, having persisted through two presidential transitions.[16]Consequently, once import adjustment is authorized for pharmaceuticals and their ingredients, the Trump Administration will gain long-term leverage against the pharmaceutical industry to onshore manufacturing.[17]
The Driving National Security Concerns
The Section 232 investigation does not focus solely on pharmaceutical finished dose forms (FDFs),[18] of which 38% are produced in the U.S. and 31% in India.[19] Instead, the investigation places an emphasis on all phases of the pharmaceutical supply chain, including critical inputs, to ensure complete resiliency and security.[20] Key to this is the production of active pharmaceutical ingredients (APIs).[21] APIs are the biologically active compounds in a finished drug,[22] essentially “produc[ing] the intended effect of a drug.”[23] Despite their importance, over half of APIs for prescription drugs in the U.S. are manufactured overseas.[24]
A 2019 report by the FDA found that China and India accounted for 14% and 31%, respectively, of the API manufacturing sites for the U.S. market, while the U.S. accounted for only 12%.[25] The report further found that the number of registered Chinese API facilities “more than doubled between 2010 and 2019.”[26] In response, the industry has countered that the U.S. manufactures a majority by value of the APIs used in U.S.-consumed medicines.[27] Both of these measurements, however, are unreliable.[28] Examining API production by the number of regional manufacturing sites conceals potential differences in production volumes, while examining by value without normalization inflates the U.S. percentage value by disregarding differences in production costs.[29]
Instead, when API production is measured by volume, regional manufacturing capabilities are revealed.[30] Data reported by the United States Pharmacopeia (USP) in 2024 indicates a distinction in API sourcing between U.S. brand pharmaceuticals and generics.[31] The report shows that brand-name pharmaceutical manufacturers source 43% of APIs from EU allies and only 5% from China and India combined.[32] In contrast, generic manufacturers source 35% of APIs from India and 8% from China.[33] Consequently, adversarial weaponization of APIs would hamper domestic production of FDFs, especially for generics, which would harm the health of American citizens through essential drug shortages. This concern carries particular weight in light of the recent deterioration in U.S.-India relations as India strengthens ties with China, Russia, and Iran.[34]
Potential Impact on the Research Triangle
Tariffs to onshore the manufacture of FDFs and pharmaceutical ingredients, such as APIs, will inevitably impact pharmaceutical manufacturing and jobs in North Carolina.[35] The brand-name biopharmaceutical sector alone supports 226,487 jobs in North Carolina, generating $80.2 billion in economic output across 72 manufacturing plants.[36] Much of this is centered in the Research Triangle region.[37] In the short term, trade restrictive policies like tariffs could “hinder market access . . . and potentially result in higher product costs” due to supply chain disruptions.[38]These potential disruptions, combined with the 5-to-10-year period required to establish new domestic manufacturing,[39] have led and will continue to lead to market uncertainty, resulting in industry-wide layoffs.[40] Ultimately, the decision to impose Section 232 tariffs will require the Trump Administration to weigh the cost of sacrificing short-term pharmaceutical manufacturing and jobs for long-term supply chain security and resiliency, the impacts of which will be particularly hard felt in the Research Triangle.
[1] Section 232 National Security Investigation of Imports of Pharmaceutical and Pharmaceutical Ingredients, 90 Fed. Reg. 15951, 15952 (proposed Apr. 16, 2025) [hereinafter Section 232 Investigation]; Trade Expansion Act of 1962 § 232, 19 U.S.C. § 1862.
[2] Exec. Order No. 14273, 90 Fed. Reg. 16441, 16443 (Apr. 15, 2025).
[3] Section 232 Investigation, 90 Fed. Reg. at 15952; see also Exec. Order No. 14293, 90 Fed. Reg. 19615 (May 5, 2025) (granting regulatory relief to pharmaceutical manufacturers to promote domestic production).
[4] 19 U.S.C. § 1862(c).
[5] Trump demands lower drug prices, threatens 250% pharma tariffs, Advisory Bd. (Aug. 7, 2025), https://www.advisory.com/daily-briefing/2025/08/07/drug-pricing; PhRMA, Comment Letter on Section 232 Investigation, at 19 (May 6, 2025), https://www.regulations.gov/comment/BIS-2025-0022-0070.
[6] 19 U.S.C. § 1862(b)(1)(A)–(b)(3)(A). There is a public comment period within the 270-day time frame. Id. § 1862(b)(2)(A)(iii).
[7] Id. § 1862(c)(1)(B).
[8] See, e.g., Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548 (1976) (imposing license fees on the import of oil); U.S. Cane Sugar Refiners v. Block, 683 F.2d 399 (C.C.P.A. 1982) (imposing annual quota on sugar blends); Proclamation No. 10947, 90 Fed. Reg. 24199 (June 3, 2025) (imposing ad valorem tariffs on steel and aluminum).
[9] 19 U.S.C. § 1862(c)(3)(A).
[10] U.S. Const. art. I, § 8, cl. 1.
[11] Id. § 1862(c).
[12] America Trades Down: The Legal Consequences of President Trump’s Tariffs, Lawfare (Mar. 13, 2018), https://www.lawfaremedia.org/article/america-trades-down-legal-consequences-president-trumps-tariffs.
[13] Algonquin SNG, Inc., 426 U.S. at 571.
[14] Block, 683 F.2d at 404 (“The President’s action being authorized by the statute on which he relied, his motives, his reasoning, his findings of facts requiring the action, and his judgment, are immune from judicial scrutiny.”) (citing United States v. George S. Bush & Co., Inc., 310 U.S. 371 (1940)).
[15] V.O.S. Selections, Inc. v. Trump, No. 25-1812, 2025 WL 2490634, at *1 (Fed. Cir. Aug. 29, 2025), petition for cert. filed.
[16] Proclamation No. 10947, 90 Fed. Reg. at 24199.
[17] See, e.g., id. (showing long-term leverage against foreign aluminum and steel manufacturers).
[18] See Section 232 Investigation, 90 Fed. Reg. at 15952.
[19] India and the United States manufacture most finished medicines for the U.S. market, U.S. Pharmacopeial (Feb. 19, 2025), https://qualitymatters.usp.org/india-and-united-states-manufacture-most-finished-medicines-us-market.
[20] Section 232 Investigation, 90 Fed. Reg. at 15952.
[21] What Are APIs in Pharmaceutical Manufacturing?, Bachem (Aug. 22, 2024), https://www.bachem.com/articles/blog/what-are-apis-in-pharmaceutical-manufacturing/.
[22] Id.
[23] Id.
[24] Over half of the active pharmaceutical ingredients (API) for prescription medicines in the U.S. come from India and the European Union, U.S. Pharmacopeial (Apr. 17, 2025), https://qualitymatters.usp.org/over-half-active-pharmaceutical-ingredients-api-prescription-medicines-us-come-india-and-european.
[25] U.S. Food & Drug Admin., Drug Shortages: Root Causes and Potential Solutions, at 29 (2019), https://www.fda.gov/drugs/drug-shortages/report-drug-shortages-root-causes-and-potential-solutions.
[26] Safeguarding Pharmaceutical Supply Chains in a Global Economy: Hearing Before the Subcomm. on Health of the H. Comm. on Energy and Com., 116th Cong. (2019) (statement of Dr. Janet Woodcock, Director, Center for Drug Evaluation and Research), https://www.fda.gov/news-events/congressional-testimony/safeguarding-pharmaceutical-supply-chains-global-economy-10302019#ftn6.
[27] PhRMA, Comment Letter on Section 232 Investigation, at 19 (May 6, 2025), https://www.regulations.gov/comment/BIS-2025-0022-0070; see also US Makes Majority of API by Dollar Value in US-Consumed Medicines, Avalere Health (June 14, 2023), https://advisory.avalerehealth.com/insights/majority-of-api-in-us-consumed-medicines-produced-in-the-us.
[28] U.S. Pharmacopeial, supra note 24.
[29] Woodcock, supra note 26 (explaining that low labor and material costs as well as fewer environmental regulations in China lead to lower production costs).
[30] U.S. Pharmacopeial, supra note 24.
[31] Id.
[32] Id.
[33] Id.
[34] Trevor Hunnicutt et al., As Trump chills US-India ties, Modi warms to China and Russia, Reuters (Sept. 3, 2025), https://www.reuters.com/world/china/trump-chills-us-india-ties-modi-warms-china-russia-2025-09-03/.
[35] Off. of U.S. Trade Representative, 2025 Special 301 Report, at 30 (2025), https://ustr.gov/sites/default/files/files/Issue_Areas/Enforcement/2025%20Special%20301%20Report%20(final).pdf.
[36] Economic Impact, PhRMA, https://phrma.org/resources/state-map/economic-impact (last visited Sept. 8, 2025).
[37] Company Directory, Rsch. Triangle Park, https://www.rtp.org/directory-map/ (last visited Sept. 8, 2025).
[38] Off. of U.S. Trade Representative, supra note 35.
[39] Exec. Order No. 14293, 90 Fed. Reg. 19615 (May 5, 2025) (“Industry estimates suggest that building new manufacturing capacity for pharmaceuticals and critical inputs may take as long as 5 to 10 years.”).
[40] Elizabeth Crisp, August job cuts highest since pandemic: Report, The Hill (Sept. 4, 2025), https://thehill.com/business/5485625-august-job-cuts-hit-pharma-finance/ (reporting that the pharmaceutical industry cut 19,111 jobs in August).
