President Donald Trump signed an executive order Thursday establishing a tiered tariff system for imported pharmaceuticals, with rates ranging from zero to 100% depending on company compliance with administration requirements.

Under the new system, companies that have signed "most favored nation" pricing agreements with the administration and are actively building U.S. manufacturing facilities for patented drugs will face zero tariffs. Companies building U.S. facilities but lacking pricing deals will face 20% tariffs initially, rising to 100% over four years. Companies with neither agreements nor U.S. manufacturing plans could face the full 100% tariff rate.

A senior administration official said companies have 120 to 180 days to negotiate agreements before higher tariffs take effect, with larger companies receiving shorter deadlines. The administration has already reached 17 pricing deals with major drugmakers, with 13 signed to date, though specific companies were not identified.

The executive order cited national security concerns regarding pharmaceutical imports as justification for the tariffs, invoking Section 232 of the 1962 Trade Expansion Act. The announcement came on the first anniversary of Trump's "Liberation Day" tariffs, many of which were later overturned by the Supreme Court in February.

Certain countries received preferential treatment under the new framework. The European Union, Japan, South Korea and Switzerland will face 15% tariffs on patented pharmaceuticals, while the United Kingdom will see 10% rates that could drop to zero under future trade agreements.

Trump also announced updates to existing metal tariffs Thursday, changing how duties are calculated on steel, aluminum and copper imports. The pharmaceutical industry warned the new tariffs could increase costs and jeopardize U.S. investments, with trade group PhRMA noting that imported medicines primarily come from reliable U.S. allies.