How Your Intermediate Became a Pharmaceutical Article

On July 30 Customs and Border Protection published ten new tariff headings. Nine of them charge a pharmaceutical duty.

The tenth exists so you can tell the government your chemical is not a pharmaceutical.

That tenth heading is 9903.04.69, it carries 0%, and if you import an organic intermediate that sits in one of the chapter 29 lines the April proclamation named, you have been filing it since July 31 whether anyone in your organisation noticed or not.

"What happens to a specialty chemical that a pharmaceutical tariff can reach and a pharmaceutical patent prices?"

Ten Headings, One of Which Is Yours

The instrument is Proclamation 11020, signed April 2, which put a 100% ad valorem duty on patented pharmaceuticals and their associated active ingredients. Key starting materials are named in scope, which is the part that pulls this out of pharma and into chemicals.

Annex I is a positive list. ArentFox Schiff counts roughly 120 ten-digit HTSUS codes on it, spread across chapter 29, organic chemicals, and chapter 30, pharmaceutical products.

Chapter 29 is not a pharmaceutical chapter. It is where a great deal of ordinary fine-chemical trade is classified, and the proclamation reaches into it by tariff line rather than by end use.

So CBP had to build a way for everyone else to get out. The July 30 guidance, CSMS # 69395344, created headings 9903.04.60 through 9903.04.69, and the rate ladder runs from 100% down to zero (chart below).

Seven of the ten charge nothing. Three charge something. And here is the sentence that matters more than any of the rates:

Effective July 31, every importer of goods in the affected chapter 29 and 30 classifications must report an applicable heading from 9903.04.60 through 9903.04.69, even where no additional duty is due.

You are already in this system. The duty is the only thing still pending.