The news: The Supreme Court struck down President Trump’s authority to levy tariffs on US companies, including drugmakers that import roughly half of the active pharmaceutical ingredients used in prescription medications.

The justices’ 6-3 ruling invalidates country-by-country reciprocal tariffs, which would include pharma product deals struck with the EU in August to cap pharma import tariffs at 15%, and with the UK in December for an exemption on pharma exports to the US in exchange for drug price increases and lowered rebate rates.

However, pharma tariffs were pursued through a Section 232 national security investigation launched in April into pharmaceutical imports. If officials conclude those imports pose a national security risk, it could provide a legal basis for pharma tariffs or other restrictions.

Soon after the decision, Trump promised to sign a broad 10% global tariff, invoking Section 122 of the Trade Act of 1974, which could blunt industry relief for at least 150 days.

Catch up quick: Early in his second term, Trump talked about a 25% tariff on pharma products. Then in July, he escalated the threat to 200% with a delayed phase-in to encourage US manufacturing. By August, he warned tariffs could reach 250% unless companies committed to expanding US production.

Why it matters: Trump’s proposed tariffs and pricing reforms forced the healthcare industry to overhaul its financial and manufacturing strategies.

• By the end of 2025, most pharma companies struck individual deals with the Trump administration to avoid 3 years of tariffs in exchange for commitments to increase US manufacturing. They also pledged to equalize drug prices with other developed nations and offer some direct-to-consumer discounted drug prices.
• Medical device and diagnostics companies were not included in pharma tariff exemption and negotiations. Those companies have been paying a 10% base rate, plus fees depending on the country. Abbott and Johnson & Johnson estimated in their Q2 earnings that the tariffs would cost them each about $200 million.
• Generic drugs were exempted from tariffs by the administration in October.

Implications for pharma and medical device makers: While the administration’s blunt-force tariff authority has been checked, the industry remains tethered to previous manufacturing and pricing commitments that are both politically and financially difficult to unravel. And the ongoing Section 232 investigation leaves open the possibility of pharma tariffs if officials conclude drug imports threaten national security.

For medical device companies, if the reduced tariff exposure holds, along with the possibility of refunds, it could modestly improve financial performance in coming quarters.

Go deeper: We detail how the tariff reversal will impact retail sales and search ad spending in our Live FAQ.

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