Commerce Releases Applications For Onshoring Agreements To Reduce Section 232 Tariffs

On May 11, 2026, the U.S. Department of Commerce published the procedures for companies to apply for agreements with the U.S. government to reduce Section 232 tariffs on imported patented pharmaceutical products by onshoring manufacturing.

Section 232 Background 

On April 2, 2026, President Trump issued a proclamation imposing Section 232 tariffs on certain pharmaceutical products imported into the United States. Section 232 authorizes the president to adjust imports to address national security threats. In the proclamation, the President stated that the U.S.’s reliance on imports of pharmaceuticals has created fragile supply chains, threatening national security.

President Trump imposed a 100% tariff on certain patented pharmaceuticals and their associated ingredients. The tariffs will take effect for certain large companies on July 31, 2026, and for small companies on September 29, 2026.

The proclamation also included several carveouts. For example, Companies that have entered into qualifying agreements with the US government and developed plans to onshore production of patented pharmaceuticals and associated ingredients will be subject to only a 20% tariff from September 29, 2026, through April 2, 2030. 

Onshoring Agreement Application Process

On May 11, 2026, Commerce published procedures for companies to apply for Onshoring Agreements that would qualify them for the reduced 20% tariff. 

Applications must include: 

• Organization Information: Full legal name, address, ownership structure, and beneficial ownership, including the country where the company’s headquarters is located.
• Total Investment: The grand total of new investments to be made in the United States from January 20, 2025, to January 20, 2029. 
• Onshoring Commitment: A comprehensive explanation of what part of the company’s existing patented product portfolio it will onshore.
• Percentage of U.S. and Global Sales Produced in U.S.: The percentage of the company’s U.S. sales of patented pharmaceuticals whose APIs are produced in the United States as of January 20, 2025, and the expected percentage of its U.S. sales that will be U.S.-made as of January 20, 2029. 
• Investment Commitment: 
  • A description of what part of its patented product portfolio the company proposes not to onshore 
  • A statement that it is commercially unfeasible to onshore these products, and an explanation as to why this is the case.
  • The estimated hypothetical cost to establish production facilities in the United States for these products.
  • A statement of the amount that the company commits to spend on new brick-and-mortar facilities in the United States by January 20, 2029.
  • Investment and production milestones.
  • A commitment to submit audited reports to Commerce at least semiannually 
  • A statement of whether the company has entered into, or is pursuing, a Most Favored Nation Pricing Agreement with the HHS; and
  • A commitment to provide supporting information upon request by Commerce, whether before or after entering into the onshoring agreement.
• Annex A—Planned Pharmaceutical Production Investments: This annex provides a template for companies to submit the information described above.
• Annex B—Tariff Adjustment: In this annex, companies should provide information about the products for which they request preferential treatment, including HTSUS codes, country of origin, name, and address of exporters.
• Certification: Applications shall include a certification, such as a sworn statement, from a senior officer of the company confirming that the submission is true, accurate, and complete to the best of the company’s knowledge.

Applications and supporting documentation should be submitted to Commerce via email at pharma232@bis.doc.gov by June 12, 2026.

Commerce Approval Process

Commerce will review each application on a case-by-case basis. The department may condition its approval on modifications to a proposed onshoring plan. There is currently no deadline for Commerce to issue its decisions. When an application is approved, the department will notify applicants in writing and transmit relevant information to CBP to administer the reduced tariff rate.

Considerations for Importers 

While the onshoring process creates significant tariff savings opportunities, Commerce has made clear that the government will be strictly enforcing the onshoring agreements. The notice stated that if a company engages in fraud or deliberately misleads the government regarding onshoring commitments, Commerce may subject the company’s products to the 100% tariff prospectively and retroactively. Companies could also face liability under other frameworks, such as the False Claims Act. With enforcement at an all-time high, companies must carefully consider the commitments they make in applications for Onshoring Agreements.

Diaz Trade Law has extensive experience assisting importers with matters in front of the Department of Commerce. For assistance, get in touch with a member of our team at  305-456-3830, info@diaztradelaw.com 

Learn more: 

• Department of Commerce Issues New Duty-Free Code for 232 Tariffs 
• Section 232 Valuation in a Gray Area: What Importers Need to Know 
• New Executive Order Adjusting Imports of Aluminum, Steel, and Copper into the United States
• Bloomberg Law: CBP Recordkeeping Requirements
• Bloomberg Law: Import Compliance & Training Programs 
• Bloomberg Law: Bloomberg Law Feature: Responding to CBP Form 28 or 29 
• Webinar: Navigating CBP Regulations: Essential Practices for Import Success 
• Webinar: Building and Maintaining an Effective Import Compliance Plan 
• Webinar: Introduction to Importing 

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