{"id":8958,"date":"2026-10-23T16:23:30","date_gmt":"2026-10-23T14:23:30","guid":{"rendered":"https:\/\/leyton.com\/ca\/?post_type=article&p=8958"},"modified":"2026-10-23T16:23:32","modified_gmt":"2026-10-23T14:23:32","slug":"section-232-tariffs-onshoring-impact-on-life-sciences-cdmos","status":"publish","type":"article","link":"https:\/\/leyton.com\/ca\/en\/insights\/articles\/section-232-tariffs-onshoring-impact-on-life-sciences-cdmos\/","title":{"rendered":"Section 232 Tariffs & Onshoring: Impact on Life Sciences & CDMOs"},"content":{"rendered":"\n

Tariffs, Pricing and Onshoring: The consequences of U.S. Section 232 pharmaceutical measures, most-favoured-nation pricing and onshoring agreements for Canadian and Quebec contract research and contract development and manufacturing organizations<\/em><\/strong><\/p>\n\n\n\n

How are U.S. Section 232 tariffs, Most-Favoured-Nation pricing, and onshoring agreements reshaping the Canadian life sciences landscape? Authored by Laurent Lecanu, Head of Life Science Cluster North America<\/strong>, this white paper delivers a segment-by-segment analysis of the operational risks, market shifts, and strategic opportunities facing CROs and CDMOs through 2030. Preview the key findings below and download the full report.<\/p>\n\n\n\n

Abstract<\/h2>\n\n\n\n

On 2 April 2026 the United States invoked Section 232 of the Trade Expansion Act of 1962 to impose tariffs of up to 100% on imported patented pharmaceuticals, their active pharmaceutical ingredients (APIs) and key starting materials. <\/p>\n\n\n\n

The measure became fully applicable to all importers on 29 September 2026. It operates alongside two company-level instruments: most-favoured-nation (MFN) drug pricing agreements negotiated with the Department of Health and Human Services, and onshoring agreements negotiated with the Department of Commerce. <\/p>\n\n\n\n

This paper examines how the three instruments, taken together, affect Canadian and particularly Quebec contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), now and over the period to 2030.<\/p>\n\n\n\n

We find that the immediate, direct impact on the sector is narrower than the headline 100% rate suggests, because generics, clinical and research materials, products of companies holding MFN and onshoring agreements, and certain specialty products are exempt or zero-rated. <\/p>\n\n\n\n

However, Canada obtained none of the preferential treatment granted to the European Union, Japan, South Korea, Switzerland or the United Kingdom, and the U.S. rule that a drug’s origin follows its API places Canadian API producers in the most exposed position. <\/p>\n\n\n\n

More importantly, the combination of tariffs with MFN and onshoring commitments is redirecting future commercial manufacturing toward the United States and is making Canada, a reference country in the U.S. MFN basket, a lower-priority launch market. <\/p>\n\n\n\n

These forces threaten the commercial pipeline on which the CDMO business model depends and, indirectly, the siting of late-phase clinical trials. Generic manufacturing faces the most severe structural risk: an announced, though not yet enacted, schedule of 100% tariffs from August 2028 rising to 200% in 2029 would be prohibitive for a low-margin sector that accounts for most Canadian drug exports to the United States.<\/p>\n\n\n\n

Key findings<\/h2>\n\n\n\n