Supreme Court rules ‘reciprocal’ tariffs are unconstitutional, pharma sector not impacted

The U.S. Supreme Court on Friday ruled that President Donald Trump’s country-specific “reciprocal” tariffs enacted under the 1977 International Emergency Economic Powers Act (IEEPA) of 1977 are unconstitutional. In a 6-3 decision, the nation’s highest court said that the IEEPA “does not authorize the President to impose tariffs.”

The Trump administration used the IEEPA to justify its reciprocal tariffs, impacting dozens of countries. However, the Supreme Court’s ruling does not cover tariffs enacted under Section 232 of the Trade Expansion Act of 1962, leaving Trump with the option of still imposing such tariffs on pharmaceuticals imported to the U.S.

Under Section 232 of the Trade Expansion Act, the Department of Commerce is investigating the feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance, and whether pharma-specific tariffs are necessary. With the outcome of that probe still in the works, the pharmaceutical industry remains at risk. 

"Today’s ruling and subsequent developments are only part of the story for the life sciences industry, leaving key questions around tariff exposure and trade uncertainties,” said Kristin Ciriello Pothier, Americas life sciences leader at KPMG.

Trump’s pharma tariff threats

Since the start of his second term, Trump has doubled, tripled, and quadrupled down on his threat to impose pharma-specific tariffs, with levies on pharmaceutical imports to the U.S. threatened to reach as high as 250%. So far, he has refrained from levying such taxes — an authority not impeded by Friday’s Supreme Court ruling — as Trump continues to pressure Big Pharma companies to lower their U.S. prescription drug prices in exchange for tariff relief. 

A long list of large drugmakers, including Bristol Myers Squibb, GSK, Johnson & Johnson, Merck, and Pfizer, have struck agreements with the Trump administration to provide discounted U.S. medicine rates in exchange for a grace period from the Department of Commerce’s Section 232 investigation on pharmaceutical tariffs.

Large drugmakers are not the only ones to accept a quid pro quo of drug pricing for tariff exemptions. In December 2025, the Trump administration signed an agreement to exempt UK-made pharmaceuticals and pharmaceutical ingredients imported to the U.S. from Section 232 tariffs.

The results of the Department of Commerce’s Section 232 investigation into the U.S. national security implications of pharmaceutical imports were expected in 2025. However, the findings of the probe — which were to be reported to Trump for him to determine whether trade measures such as tariffs should be imposed — have yet to made public.

The Department of Commerce investigation includes finished generic and non-generic drug products as well as active pharmaceutical ingredients and key starting materials — and derivative products of those items.