Archive for category: Special Report

Air cargo rates have not normalized. According to the World ACD weekly air cargo report, global air cargo spot rates were running approximately 33% above year-ago levels through June 7, 2026, with sharper regional pressure on lanes most directly affected by the Middle East conflict. The Strait of Hormuz peace agreement, announced earlier this month, has set the stage for eventual normalization. The freight market is not there yet.

For pharmaceutical, biotech, and medical device shippers whose supply chains depend disproportionately on air freight for temperature-sensitive and time-critical product, the rate environment continues to require operational discipline. This article looks at where rates stand, why they remain elevated even as the conflict winds down, and what life sciences shippers are doing to manage it.

Where Air Cargo Rates Stand: A Regional Snapshot

The pattern is consistent: rates are elevated globally, with the most acute pressure on lanes most directly affected by the Middle East disruption. The 53% Y/Y increase on Middle East and South Asia lanes is particularly significant for pharmaceutical importers, since India, the destination most U.S. pharmaceutical importers are diversifying toward, sits squarely in that affected region.

Why Rates Remain Elevated Even as the Conflict Winds Down

Several factors are keeping air cargo rates elevated even as the immediate military disruption resolves:

Jet Fuel Supply Has Not Normalized

Bunker fuel rates were up an additional 51% year-over-year as of the most recent reporting, reflecting the broader Middle East energy disruption working through global supply. Jet fuel availability in the Asia-Pacific region remains constrained as supply chains rebuild. Until fuel supply normalizes, the structural cost basis for air freight remains elevated.

Aircraft and Crew Repositioning

When global air routes are disrupted, returning to normal operations requires more than a peace announcement. Aircraft positioning, crew scheduling, maintenance cycles, and slot allocations at affected airports all need to rebuild. The operational lag between policy resolution and freight market normalization is typically measured in weeks to months, not days.

Ocean-to-Air Mode Shifts

Shippers who moved volume from ocean to air during the disruption have not all moved back. For time-sensitive and high-value cargo, including most pharmaceutical product, the operational benefits of air freight justify continued use even after ocean lanes stabilize. Sustained air freight demand keeps capacity tight.

Sourcing Diversification Effects

As U.S. importers expand sourcing from India, Vietnam, and other Asia-Pacific destinations, more cargo moves by air on lanes that were less utilized historically. The demand profile of air freight has shifted alongside the sourcing patterns it serves.

The Hormuz peace agreement is necessary for normalization but not sufficient. The freight market is in transition; the new equilibrium has not yet been established.

Why Pharmaceutical Supply Chains Are Disproportionately Affected

Life sciences supply chains depend on air freight more heavily than most industries. Biologics, monoclonal antibodies, vaccines, GLP-1 therapies, investigational clinical materials, temperature-sensitive APIs, and medical devices all rely on air transit for the speed and reliability that ocean cannot provide. When air cargo rates rise by a third, and significantly more on key pharma lanes, the effect on landed cost and operational planning is direct and significant.

Specific operational pressures pharmaceutical shippers are managing right now:

• Cold chain shipments face elevated rates of 26–53% Y/Y depending on origin region, with the largest increases on the lanes most heavily used for pharma imports from India and Asia
• Specialty cold chain freighter capacity remains tight as airlines continue to prioritize higher-yielding general air cargo on constrained networks
• Bunker fuel surcharges are still rising across all modes, with the 51% Y/Y bunker fuel increase reported in DHL’s recent monthly report continuing to feed into rate structures
• Booking lead times remain extended at major Asian airports as the air freight network rebalances
• Pharma corridor specialization is becoming more important with certain carriers building stronger pharma-handling capabilities than others, carrier selection matters more than it did pre-conflict

What Pharmaceutical Shippers Are Doing About It

Blended Ocean-Air Strategies

The shippers handling the current environment best are not moving entirely to air or remaining entirely on ocean. They are running blended strategies, moving time-critical and temperature-sensitive product by air while accepting longer ocean transits for lower-priority inventory. Building flexibility into mode selection by SKU is the operational baseline rather than treating mode as a fixed assumption.

Earlier Booking Windows

Air freight capacity at major Asian and Middle Eastern origins remains booked further out than pre-conflict norms. Shippers expecting last-minute capacity availability are finding none. The companies maintaining service continuity are booking earlier, accepting tentative scheduling adjustments, and building longer planning windows into procurement decisions.

Carrier Diversification

Companies whose air freight programs ran through a single primary carrier are qualifying secondary carriers as backup capacity. With flight cancellations rising in fuel-constrained regions and capacity booked out at primary airlines, having pre-qualified alternative routing has become essential rather than optional.

Integrated Customs and Cold Chain Planning

With every air freight movement now more expensive, the cost of a customs clearance delay has risen sharply. A 24-hour customs hold on a refrigerated biologic is not a paperwork problem, it is a stability event. Pharmaceutical shippers are increasingly insisting that their freight forwarder, customs broker, and cold chain warehouse coordinate in real time. The integration that was a nice-to-have in stable markets is operationally necessary in this one.

Updated Landed Cost Models

Companies whose landed cost models still reflect pre-conflict freight assumptions are operating on stale data. Updating freight cost assumptions, surcharge expectations, and lead time buffers is necessary for accurate pricing and procurement decisions.

The Outlook

Air cargo rates will normalize over time. The Hormuz peace agreement, if it holds, removes the major catalyst for the current disruption. But the path back to pre-conflict rate levels is likely to be slower than the path that created the current environment. Aircraft repositioning, fuel supply normalization, and the rebalancing of ocean vs. air mode shares all take time.

For pharmaceutical shippers, planning around the assumption of slow rate normalization through the remainder of 2026 is reasonable. Planning around any specific date or level is not. The companies best positioned will be those who treat freight cost as a variable to manage, not a fixed assumption to absorb.

How Euro-American Worldwide Logistics Supports Pharmaceutical Air Freight

Euro-American Worldwide Logistics operates air freight forwarding from both Worcester Regional Airport and Logan International Airport, providing dual-gateway access that enables routing flexibility when one airport faces capacity constraints. Our international agent network supports air freight movements worldwide, with established carrier relationships across the major pharma corridors.

Our integrated cGMP-compliant warehouse and in-house licensed U.S. Customs Brokerage operate from the same facility, which means international pharmaceutical shipments arriving by air move directly from CBP release into validated temperature-controlled storage, without the vendor handoff that turns a customs delay into a cold chain event.

For questions about air freight options for time-sensitive pharmaceutical and life sciences shipments, contact our team.

Sources include the LogisticsPULSE June 2026 Executive Briefing; World ACD Weekly Air Cargo Trends Report through June 7, 2026; and DHL Global Forwarding OFR Market Update June 2026.

The April 2, 2026 presidential proclamation imposing Section 232 tariffs on patented pharmaceutical imports did not give the life sciences industry much time to prepare. For covered importers, branded drug manufacturers, biologics CDMOs, specialty pharma companies, and clinical-stage developers importing patented drug substances and APIs from international contract manufacturing partners, the clock is running. Seventeen named large pharmaceutical companies face a July 31, 2026 effective date. All other covered importers face September 29, 2026. Between those two dates and today, life sciences supply chain leaders must make consequential compliance decisions: classify every imported product against the proclamation’s HTSUS provisions, determine which tariff tier applies, engage with Commerce Department onshoring plan requirements if seeking a reduced rate, and ensure that customs entries filed after the effective date reflect the correct tariff treatment.

The operational consequences of getting this wrong are not limited to unexpected duty costs. Incorrect HTSUS classification on a Section 232 entry creates post-summary correction liability, potential CBP audit exposure, and, in serious cases, penalty exposure under 19 U.S.C. §1592. For life sciences companies whose import programs have historically operated under near-zero duty rates backed by the 1994 WTO Pharma Agreement, Section 232 represents a structural break from the prior compliance environment. The companies best positioned to manage the transition are those that have already audited their import programs, confirmed the applicable tariff tier, and engaged a licensed customs broker with knowledge of the Section 232 regulatory framework.

The Regulatory Foundation: What Section 232 Does and Why Pharmaceuticals Are Now Subject to It

Section 232 of the Trade Expansion Act of 1962 authorizes the President to impose restrictions on imports when the Secretary of Commerce finds that those imports threaten to impair national security. The authority was historically used for metals, most prominently the 2018 steel and aluminum tariffs, and was not applied to pharmaceutical products during the first Trump administration, when medicines were explicitly excluded from broad tariff actions.

The 2026 proclamation marks the first time Section 232 authority has been applied to pharmaceuticals at scale. The White House finding cites the statistic that approximately 53% of patented medicines consumed in the United States are manufactured abroad, and that over 40% of global active pharmaceutical ingredient production is concentrated in China, as the national security basis for the action. The proclamation does not characterize the tariffs as a trade remedy in the conventional sense, it frames them as an industrial policy lever designed to accelerate domestic pharmaceutical manufacturing investment by removing the economic advantage of foreign production.

The legal structure matters for compliance purposes: because Section 232 tariffs are not subject to the same exclusion request procedures that apply to Section 301 tariffs, companies cannot petition for individual product-level exclusions the way they could for Chinese goods under the prior tariff regime. The available compliance pathways are those built into the proclamation itself: the MFN pricing agreement pathway, the Commerce-approved onshoring plan pathway, and the country-of-origin-based preferential rates.

Who Is Covered and Who Is Exempt: The Tariff Tiers in Detail

The proclamation covers finished pharmaceutical products and active pharmaceutical ingredients classifiable under the Harmonized Tariff Schedule provisions listed in Annex I of the proclamation. The following table summarizes the tariff tier structure as it applies to life sciences importers:

The exemptions are specifically enumerated in the proclamation and are not discretionary. However, the generic exemption carries a critical qualification: the proclamation requires an annual review of the generic exclusion. For companies whose import programs include both branded and generic products, the classification distinction between “generic” and “patented” is not always straightforward, particularly for complex biological products where the innovator patent has recently expired and the product exists in a competitive biosimilar market.

The Compliance Decision Tree: Four Pathways for Covered Importers

Life sciences companies that have determined their imports are subject to Section 232 coverage face four practical compliance pathways, each with different cost, timeline, and administrative requirements.

1. Accept the Standard Rate and Reflect in Landed Cost Analysis

The most straightforward response for companies with limited import volume or whose commercial economics can absorb the incremental cost is to reclassify affected entries under the applicable Section 232 HTSUS heading and begin paying the 100% duty at the effective date. This pathway requires no Commerce Department engagement, no pricing agreement with HHS, and no onshoring commitment, only correct entry filing under the Annex I HTSUS codes. For companies importing small volumes of reference standards, controlled raw materials for analytical use, or drug substance for Phase 1 or 2 clinical programs where absolute duty liability is manageable, this may be the operationally simplest approach.

2. Pursue Country-of-Origin-Based Preferential Rates

For companies whose manufacturing partners are located in the European Union, Japan, South Korea, or Switzerland, the 15% country-of-origin preferential rate applies without requiring an individual company agreement. The customs compliance requirement is accurate origin documentation: a valid certificate of origin or manufacturer’s declaration establishing the country where the pharmaceutical was manufactured or underwent its last substantial transformation. Life sciences companies with manufacturing networks in Ireland, the Netherlands, Germany, Switzerland, or Japan should verify that supply chain origin documentation is in order before the effective date.

3. Apply for a Commerce-Approved Onshoring Plan

Companies willing to commit to U.S. manufacturing investments can apply to the Department of Commerce for an onshoring plan approval, reducing the tariff rate to 20% while the plan is implemented. For global CDMOs with existing or planned US operations, an onshoring plan that formalizes an already-planned US facility investment is a viable path to a reduced rate that does not require pricing concessions.

4. Execute MFN Pricing Agreement with Combined Onshoring Commitment

The zero-rate pathway, 0% tariff until January 20, 2029, requires both a Commerce-approved onshoring plan and a signed MFN pharmaceutical pricing agreement with HHS. This is the pathway that Pfizer and nine other large pharmaceutical companies executed in 2025 and early 2026. For mid-size specialty pharma companies or CDMOs, the MFN pricing pathway may carry commercial implications that outweigh the duty savings, particularly for companies with international commercial programs where price harmonization would reduce non-US revenue.

Customs Classification: The First and Most Consequential Step

Before any tariff pathway decision can be made, covered importers must complete a product-by-product classification review against the Annex I and Annex IV HTSUS codes specified in the proclamation. Classifying a covered product under the wrong heading and failing to collect the Section 232 duty creates underpayment liability that CBP may assess through a post-entry audit or CF-28 request for information. Conversely, over-classifying an exempt product, such as a biosimilar or cell therapy product, under a Section 232 heading and paying an unnecessary duty creates a refund claim requiring formal protest procedures under 19 U.S.C. §1514.

For biologics and specialty pharmaceutical products, classification is often not straightforward. A recombinant protein expressed in a CHO cell line may be classifiable under multiple HTSUS headings depending on its structural characteristics, therapeutic indication, and regulatory status (branded vs. biosimilar vs. orphan). Life sciences companies that previously relied on broadly applicable duty-free headings under WTO Pharma Agreement treatment should not assume that prior classification practices satisfy Section 232 requirements.

The Onshoring Response and What It Means for US Logistics Infrastructure

The Section 232 tariff structure is explicitly designed to drive pharmaceutical manufacturing investment into the United States. Industry analysts have tallied $370 billion to $480 billion in announced US pharmaceutical manufacturing investment for the 2025 through 2030 period, including Eli Lilly’s $27 billion plan, Merck’s $70 billion US manufacturing commitment, Regeneron’s $2 billion New York site conversion, and Moderna’s $140 million investment in domestic mRNA production.

These investments are concentrated in API manufacturing, finished drug manufacturing, and fill-finish operations, the capital-intensive production tiers that Section 232 was designed to repatriate. What they do not directly address is the warehousing, distribution, and materials management infrastructure that commercial pharmaceutical operations require on a day-to-day basis. The onshoring of manufacturing capacity without corresponding investment in GMP-compliant US storage and distribution infrastructure does not produce a functional domestic supply chain, it produces a manufacturing node without the logistics ecosystem to support it.

For global CDMOs and international pharmaceutical manufacturers establishing or expanding US manufacturing operations, validated third-party storage and satellite materials management is the practical complement to owned manufacturing investment. An established US-based GMP logistics partner provides that infrastructure immediately, under a quality agreement that integrates with the client’s quality system, without the capital expenditure or timeline of owned facility development.

Use-Case Scenarios

Scenario One: The European Biologics CDMO with US Manufacturing Expansion

Scenario: A European biologics CDMO with manufacturing sites in Germany and Ireland imports drug substance and key starting materials into the US for client delivery and analytical testing. The CDMO’s imports of patented biologics drug substance were previously duty-free under WTO Pharma Agreement treatment. Under Section 232, EU-origin imports qualify for the 15% preferential rate, but customs entries filed before the July 31 effective date have not been updated to reflect the Section 232 HTSUS classification requirements. The CDMO is simultaneously announcing a US manufacturing facility investment that may support a Commerce onshoring plan application.

Euro-American’s licensed US Customs Brokerage reviews the CDMO’s import program, confirms the applicable Annex I HTSUS headings for each product, and ensures that customs entries filed after the effective date correctly reflect EU-origin 15% duty treatment. Simultaneously, Euro-American’s Worcester facility begins serving as the US-based GMP storage node for the CDMO’s incoming drug substance and raw material inventory, providing the domestic materials management footprint that supports the onshoring plan narrative and satisfies US distribution requirements.

Scenario Two: The Specialty Pharma Company with Asian API Supply

Scenario: A specialty pharmaceutical company developing a non-orphan, non-exempt patented small molecule imports its API from a contract manufacturer in India. The API does not qualify for any exemption under the proclamation. The standard 100% tariff rate applies at the September 29, 2026 effective date. The company’s cost-of-goods model did not anticipate a 100% ad valorem duty on the drug substance, and the VP of Supply Chain must assess whether to absorb the tariff, accelerate a US API sourcing program, or restructure the import arrangement.

Euro-American’s customs brokerage team conducts a classification audit to confirm the correct HTSUS heading, calculates the annual duty liability under the standard rate versus a potential 20% onshoring plan rate, and assesses whether the company’s planned US manufacturing partnerships could form the basis of a Commerce onshoring plan application. Euro-American also provides US-based GMP storage for the company’s finished product and commercial supply inventory, enabling consolidation of US warehousing and customs brokerage functions under a single GMP-qualified logistics partner.

Scenario Three: The US CDMO Importing GMP Excipients and Raw Materials

Scenario: A US-based CDMO manufacturing sterile injectable drug products imports pharmaceutical-grade excipients, specialized packaging components, and reference standards from European suppliers. A classification review reveals that certain specialized excipients and proprietary processing aids may be classifiable under Annex IV HTSUS codes for covered pharmaceutical ingredients. The CDMO needs confirmation of which products are subject to Section 232 treatment and which are outside the proclamation’s scope.

Euro-American’s customs brokerage team conducts a product-by-product classification review, separating exempt raw materials from covered pharmaceutical ingredients and establishing the correct HTSUS heading and applicable tariff rate for each product category. Euro-American’s GMP warehouse provides US-based storage for GMP-compliant excipients and packaging materials under validated CRT conditions, with ALCOA+-compliant receiving, inventory, and chain-of-custody documentation that integrates with the CDMO’s quality system and satisfies 21 CFR Part 211 requirements.

The Role of Licensed Customs Brokerage in Section 232 Compliance

The Section 232 pharmaceutical tariff regime creates immediate demand for licensed US Customs Brokerage expertise specific to the pharmaceutical and life sciences sector. The HTSUS classification requirements for pharmaceutical products, the distinction between patented and generic status for tariff purposes, the documentation requirements for country-of-origin-based preferential rates, and the interface between CBP customs entry procedures and Commerce Department onshoring plan applications all require a broker with working knowledge of both the pharmaceutical industry’s regulatory environment and the specifics of the Section 232 proclamation.

The customs brokerage function in a life sciences context is not separable from the materials management function. A customs entry that clears a shipment of biological drug substance must be followed immediately by validated cold chain handling, the product does not wait at ambient conditions while logistics handoffs are organized. The integration of licensed customs brokerage with GMP-compliant cold chain storage and temperature-controlled final-mile distribution minimizes excursion risk, chain-of-custody documentation gaps, and customs compliance errors at the critical interface between import clearance and GMP materials management.

Euro-American Worldwide Logistics operates licensed in-house US Customs Brokerage alongside its GMP cold chain and controlled-room-temperature storage infrastructure in Worcester, Massachusetts. The combination enables life sciences importers to clear pharmaceutical shipments under Section 232-compliant customs entries and immediately transfer them to validated GMP storage, under a single quality agreement, a single chain-of-custody documentation framework, and a single operational team that understands both the customs compliance requirements and the GMP materials management requirements of pharmaceutical-grade imports.

The June-to-September Window: What Covered Importers Should Be Doing Now

The window between today and the July 31 and September 29 effective dates is narrow. Life sciences companies that have not yet begun their Section 232 compliance review are behind. The steps that should be completed before the applicable effective date include: a product classification audit against the proclamation’s HTSUS codes; an assessment of which tariff tier applies based on product category, country of origin, and any existing MFN pricing or onshoring plan agreements; engagement with a licensed customs broker to update entry filing procedures; and a review of origin documentation, certificates of origin, manufacturer’s declarations, required to substantiate the applicable rate.

For companies whose analysis reveals that the standard 100% rate applies and whose annual duty liability is significant, the onshoring plan pathway should be evaluated against existing US manufacturing investment intentions. The Commerce Department has not published a formal processing schedule for onshoring plan approval, which means companies seeking the 20% reduced rate by the effective date must move immediately.

Life sciences importers seeking to understand their Section 232 exposure and ensure compliant customs entries before the July 31, 2026 effective date should contact Euro-American Worldwide Logistics, licensed in-house US Customs Brokerage, integrated with GMP cold chain storage and distribution, 40 miles west of Boston.

A large and growing share of U.S. imports involve transactions between related parties — a U.S. subsidiary purchasing goods from its foreign parent, an American manufacturer sourcing from an affiliated overseas plant, a distributor buying from a related supplier in the same corporate family. For these importers, the price declared on the entry is not set by an arm’s-length market negotiation. It is set by an internal transfer pricing policy.

That creates a compliance challenge that many importers underestimate. Transfer pricing is typically managed by a company’s tax or finance team, with the primary objective of satisfying IRS requirements. But U.S. Customs and Border Protection evaluates related-party pricing under a completely separate legal framework, with different standards, different documentation requirements, and different consequences when the declared value does not hold up to scrutiny.

Understanding where those two frameworks diverge — and what CBP is looking for when it reviews related-party transactions — is essential for any importer whose supply chain runs through affiliated entities.

Two Agencies, Two Different Standards

When a U.S. importer buys goods from a related foreign entity, both the IRS and CBP have an interest in the price. But they are asking fundamentally different questions.

The IRS applies the arm’s-length standard: were the goods priced as they would have been between unrelated parties, with profits appropriately allocated between countries? The IRS is concerned with tax liability and profit shifting between jurisdictions.

CBP applies the transaction value method under 19 U.S.C. §1401a: what was the price actually paid or payable for the merchandise when sold for export to the United States, and does that price accurately reflect the dutiable value of the goods? CBP is concerned with whether the correct amount of duty was collected.

These are not the same question. A transfer price that satisfies the IRS arm’s-length standard does not automatically satisfy CBP’s transaction value requirements. A company can be fully compliant with IRS transfer pricing rules and still face a CBP audit finding that its declared customs values were understated.

The most common misconception in related-party import compliance is that a defensible transfer pricing study protects the importer in a CBP audit. It does not. CBP applies its own statutory tests, and the documentation requirements are different.

How CBP Evaluates Related-Party Transaction Value

Under U.S. customs law, transaction value between related parties is acceptable only if the importer can demonstrate one of the following:

The Circumstances of the Sale Test

The importer demonstrates that the transfer price closely approximates the price at which identical or similar goods are sold to unrelated buyers in the U.S. at or about the same time, or that the price covers all costs and includes a profit representative of the seller’s overall profit over a representative period. This test requires documented analysis — not simply an assertion that the price is arm’s length.

Test Values

The declared price closely approximates one of several CBP benchmark values: the transaction value of identical or similar goods sold to unrelated buyers, the deductive value, or the computed value. If the related-party price falls within an acceptable range of these benchmarks, CBP will generally accept transaction value.

If neither test is satisfied, CBP moves to alternative valuation methods in the statutory hierarchy — deductive value, computed value, or the fallback method — which may produce a higher dutiable value than the transfer price and result in additional duties being assessed retroactively.

Audit Exposure: CBP can audit entries up to five years after filing. An importer whose related-party valuation methodology has not been reviewed and documented is carrying five years of potential duty exposure on every entry filed in that period. That exposure compounds quickly for importers with high volumes of related-party transactions.

Dutiable Additions That Importers Miss

Even when CBP accepts transaction value in a related-party transaction, the declared customs value is not simply the invoice price. Certain costs must be added to the declared value under U.S. customs law, and these additions are among the most common sources of undervaluation found in CBP audits of related-party importers.

• Assists: materials, components, tools, molds, dies, or engineering work provided by the U.S. buyer to the foreign manufacturer free of charge or at reduced cost. The value of assists must be added to the customs value of the goods they were used to produce, even if the invoice price does not reflect them
• Royalties and license fees: payments made by the importer to the seller or a third party as a condition of the sale of the imported goods. If the royalty is related to the imported merchandise and is a condition of sale, it is dutiable — regardless of whether it is invoiced separately
• Proceeds of subsequent resale: any amount that accrues to the seller as a result of the resale or use of the imported goods in the United States that is not already reflected in the invoice price
• Packing costs: the cost of containers and packing materials used to ship the goods to the U.S. is included in customs value

For pharmaceutical and biotech importers, royalties and assists are particularly common and particularly easy to miss. A U.S. company that provides formulation knowledge, proprietary manufacturing processes, or tooling to an overseas contract manufacturer may be providing an assist that should be included in the customs value of every shipment produced using those inputs. A licensing arrangement that requires the foreign manufacturer to pay royalties to the U.S. parent may create dutiable royalty additions that flow in the opposite direction. These are the kinds of fact-specific determinations that require careful analysis rather than a standard checklist.

Retroactive Transfer Pricing Adjustments and Customs Reconciliation

Many multinational companies make year-end transfer pricing adjustments — sometimes called “true-ups” — to align intercompany pricing with tax planning objectives after the fiscal year closes. These adjustments raise or lower the effective price of goods that were already imported and entered months earlier.

From a customs compliance standpoint, this creates a specific problem. Duties are assessed at the time of entry based on the declared value. If a year-end adjustment retroactively raises the effective price of imported goods, the importer may have underpaid duties on those entries. If the adjustment lowers the effective price, the situation is more complex: CBP may view the original declared value as inaccurate, and the adjustment may need to be disclosed.

CBP’s reconciliation program exists precisely for this situation. An importer who knows at the time of entry that the transfer price may be subject to a year-end adjustment can flag the entry for reconciliation, allowing the final value to be reported after the adjustment is known. This is the correct procedural path — but it requires proactive planning before the entries are filed, not a corrective response after the adjustment has already been made.

For importers who have already made retroactive adjustments without filing reconciliation entries or post-summary corrections, the question is how much exposure has accumulated and how to address it. A voluntary prior disclosure to CBP, made before CBP initiates its own inquiry, can significantly reduce penalty exposure under 19 U.S.C. §1592.

What CBP Is Looking for in an Audit

Transfer pricing issues appear regularly in CBP’s Focused Assessment audits and risk-based targeting reviews. CBP’s audit team is experienced at identifying the indicators that suggest related-party valuation has not been properly managed:

• Valuation inconsistencies: differences between the customs values declared on entry documents and the values reflected in the importer’s financial records or transfer pricing documentation
• Unreported assists: production tooling, molds, or engineering services provided to a foreign supplier that do not appear in the customs value of the resulting shipments
• Royalty payments not reflected in customs value: license fee payments to related or unrelated parties that are conditions of sale but are not included in the declared value
• Year-end adjustments without reconciliation filings: true-up adjustments that changed the effective price of imported goods but were not disclosed to CBP
• Related-party import volume: importers with a high proportion of related-party transactions are more likely to be selected for review

The best preparation for a CBP audit is the same as the best ongoing compliance practice: accurate declared values, documented methodology for related-party pricing, identified and properly valued dutiable additions, and a reconciliation strategy for entries where the final value is not known at the time of import.

How Euro-American Worldwide Logistics Supports Valuation Compliance

Customs valuation is one of the more technically demanding areas of import compliance, and it is one where the consequences of getting it wrong accumulate quietly across years of entries before surfacing in an audit. Our licensed brokerage team works with importers to review declared customs values, identify dutiable additions that may have been missed, and assess whether related-party pricing methodology is documented in a way that will hold up to CBP review.

For importers with ongoing related-party import programs, that review is most valuable as a proactive exercise — before CBP asks the questions. For importers who have already received a CBP audit notice or who have identified a valuation issue in their own records, we can assist with the corrective filings and CBP response process.

If your import program involves related-party transactions and you want to understand your customs valuation exposure, contact our team today.

Building a Compliant, Scalable Cold Chain from Clinical to Commercial

The pharmaceutical cold chain has never been more demanding. Biologics, monoclonal antibodies, GLP-1 therapies, and an expanding pipeline of temperature-sensitive products are placing requirements on cold chain infrastructure that far exceed what was standard a decade ago. The products are more complex, the regulatory expectations are higher, and the consequences of a cold chain failure — excursion, product loss, regulatory action — have never been more severe.

This report addresses what it takes to build a pharmaceutical cold chain that is compliant today and scalable through commercial growth — and where the gaps most commonly appear.

The Cost of Getting It Wrong

An estimated 20% of temperature-sensitive healthcare products are damaged or degraded during distribution — not because of product failures, but because of cold chain failures. The financial cost is significant. For high-value biologics, a single batch loss can represent hundreds of thousands of dollars. For personalized therapies and investigational products, the consequences extend beyond product replacement.

What makes pharmaceutical cold chain failures particularly costly is where they tend to occur: not within a single provider’s operation, but at the handoffs between providers. Between the international freight forwarder and the customs broker. Between customs clearance and the warehouse. Between the warehouse and the final-mile carrier.

Every gap between vendors is a gap in accountability — and a gap in the temperature record. A customs hold of 48 or 72 hours on a refrigerated shipment is not just a delay. Depending on the product’s stability profile and the packaging system’s validated hold time, it may be a product loss event. Yet most importers manage their freight forwarder and their customs broker as separate relationships, with no single party owning the temperature record across the clearance process.

The most preventable cold chain failures are not the dramatic ones. They are the quiet accumulation of uncontrolled handoffs between vendors who each own their segment and nobody owns the gaps between them.

What a Resilient Cold Chain Actually Requires

Validated Temperature Control

The temperature requirements of modern pharmaceutical products span a defined spectrum. The ranges most commonly required across pharmaceutical and biotech supply chains are:

• Controlled Room Temperature (15–25°C): standard for many finished drug products, APIs, and medical devices
• Refrigerated (2–8°C): required for biologics, vaccines, insulin, most monoclonal antibodies, and GLP-1 therapies
• Frozen (-20°C): required for certain biologics, vaccines, and research materials

A 3PL that can only offer one or two validated temperature ranges becomes a constraint as a product portfolio grows. Validated storage is not just about having refrigeration — it requires documented qualification of each zone, calibrated monitoring equipment, defined alarm thresholds, and a written response protocol for any deviation.

Continuous Monitoring and Documented Response

Temperature monitoring is not a passive function. It requires continuous data logging, immediate alert capability, and the ability to produce a complete, unbroken temperature record for any shipment or storage event on demand. For pharmaceutical companies operating under FDA oversight, this documentation is evidence — evidence that the cold chain performed as required and that any deviation was identified, assessed, and resolved through a documented CAPA process.

The distinction between a temperature excursion and a reportable deviation often comes down to how quickly the event was detected and how completely it was documented. Real-time monitoring with immediate alerts is not a feature — it is a regulatory expectation.

Compliance That Extends Through Import and Transport

A cold chain that is cGMP-compliant in the warehouse but uncontrolled during customs clearance or domestic transport is not a cold chain. It is a compliant segment surrounded by risk.

For pharmaceutical companies importing temperature-sensitive product from international manufacturers — the majority of biologics and APIs in the U.S. market — the customs clearance process is one of the most significant cold chain risk points in the supply chain. The only structural solution is to ensure that the party clearing customs and the party receiving the product into controlled storage are not operating as separate vendors, but as an integrated team with shared accountability for the temperature record.

Scalability from Clinical to Commercial

The choice of logistics partner at the clinical stage carries more weight than most companies recognize at the time they make it. A provider whose quality systems, facility capabilities, and distribution infrastructure already meet commercial-scale FDA requirements eliminates a significant operational and regulatory transition when approval comes. The product moves from clinical to commercial storage within the same validated environment, under the same quality system, without requalification.

That continuity is not just operationally convenient. It maintains documentation continuity, preserves the compliance record, and reduces the risk of introducing new variables into the supply chain during the highest-stakes period of a product’s commercial lifecycle.

Cold Chain Capability: What to Look For in a 3PL Partner

Bridging Clinical and Commercial: The Continuity Advantage

In many organizations, the transition from clinical supply chains to commercial distribution is one of the most logistically disruptive events in a product’s lifecycle. Trial logistics vendors often lack the scale or regulatory infrastructure required for national commercial distribution. Large commercial distributors that don’t specialize in regulated pharmaceuticals may lack the documentation rigor and handling precision that early-phase clinical operations require.

An integrated cold chain model — where one partner manages clinical material storage, just-in-time site distribution, and commercial-scale warehousing and fulfillment from the same validated facility — eliminates that transition risk. There are no new vendor qualifications, no gaps in the chain-of-custody record, and no period of supply chain uncertainty while the commercial logistics infrastructure is being stood up.

The questions worth asking when evaluating a cold chain partner for clinical-stage work are the same questions worth asking for commercial distribution: Is the facility FDA registered? Are the temperature zones validated and continuously monitored? Does the quality system meet cGMP requirements? Is there in-house customs brokerage capability for internationally sourced product? If those boxes are checked at the clinical stage, the commercial transition becomes a volume increase rather than an infrastructure overhaul.

How Euro-American Worldwide Logistics Supports the Pharmaceutical Cold Chain

Euro-American Worldwide Logistics operates a 45,000 square foot FDA registered, cGMP-compliant 3PL facility in Worcester, Massachusetts — 40 miles west of Boston, adjacent to Worcester Regional Airport, and at the center of one of the world’s most concentrated life sciences ecosystems.

Our cold chain capabilities include validated 2–8°C and 15–25°C storage across 25,000 square feet of temperature-controlled space, 24/7 monitoring with real-time alert systems, ISO-9001 certified quality controls, and CTPAT-certified security throughout the facility. Our in-house licensed U.S. Customs Brokerage team operates within the same facility as our warehouse — so internationally sourced pharmaceutical product moves directly from CBP clearance into controlled temperature storage without a vendor handoff or a gap in the temperature record.

We also provide GxP-compliant air and ocean freight forwarding through Worcester Regional Airport and Logan International, domestic distribution throughout the Northeast, and full chain-of-custody documentation from international origin through final delivery.

For pharmaceutical, biotech, and medical device companies that need a logistics partner capable of supporting their supply chain from first import through commercial scale — we are ready to talk. Contact us today.

Background: Why IEEPA Refunds Are Available

On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. As a result, tariffs collected under IEEPA — including the reciprocal tariffs announced in April 2025 and the country-specific measures imposed on Canada, Mexico, and China — were invalidated.

Following the ruling, the U.S. Court of International Trade (CIT) ordered CBP to issue refunds for duties collected under those invalidated tariffs. CBP estimated that approximately 330,000 importers paid roughly $166 billion in IEEPA duties — with about $127 billion, covering approximately 82% of entries, eligible for refund through the initial system rollout.

To manage the volume and complexity of processing refunds at that scale, CBP developed a new electronic system rather than handling claims entry by entry through existing processes.

What Is CAPE?

CAPE stands for Consolidated Administration and Processing of Entries. It is a new functionality built within CBP’s existing Automated Commercial Environment (ACE) portal, designed specifically to process IEEPA duty refunds at scale.

CAPE launched on April 20, 2026. As of that date, it became the exclusive mechanism for submitting IEEPA refund claims. Post Summary Corrections (PSCs) can no longer be used to request IEEPA refunds. Importers and authorized customs brokers who want to recover duties paid under invalidated IEEPA tariffs must go through CAPE.

CBP will not proactively issue refunds. Importers must affirmatively file a CAPE Declaration to receive a refund. If no claim is submitted, no refund will be issued.

How the CAPE Process Works

The filing process is straightforward in structure. The importer of record (IOR) or the licensed customs broker who originally filed the entries logs into the ACE Portal and navigates to the new CAPE tab. From there, they upload a comma-separated values (CSV) file — called a CAPE Declaration — listing the entry numbers for which a refund is being requested.

Each CAPE Declaration can include up to 9,999 entry numbers. Importers or brokers with more entries than that can file multiple CAPE Declarations. No additional information beyond the entry numbers is required in the CSV file.

Once submitted, ACE runs two rounds of validation: first checking the CAPE Declaration file itself for formatting and authorization, then checking each individual entry to confirm eligibility. For entries that pass both validations, ACE removes the applicable IEEPA HTS Chapter 99 codes from the entry summary and recalculates duties as if the IEEPA charges were never assessed. The difference becomes the refund amount.

Refunds are disbursed electronically via ACH — direct deposit to a bank account registered in ACE. CBP will not issue refunds by check. Importers who have not yet enrolled in ACH refunds through ACE must do so before a refund can be released. Note that having ACH set up for duty payments is not sufficient — a separate enrollment for ACH refunds is required.

CBP has indicated that valid refunds will generally be issued within 60 to 90 days of CAPE Declaration acceptance, including statutory interest, subject to standard compliance review.

One Important Note on Offsets

CBP will apply “netting” to refund calculations. If an importer has underpayments in other duty programs, CBP may offset those amounts against the IEEPA refund before disbursement. CBP may also divert refunds to cover existing fixed and undisputed debts owed to the U.S. government. Importers should account for this possibility when estimating expected refund amounts.

Phase 1 Eligibility: What’s In and What’s Out

CAPE is being rolled out in phases. Phase 1, which launched April 20, is limited to lower-complexity entries. Not every entry with IEEPA duties is eligible in this first phase.

Entries excluded from Phase 1 — including those more than 80 days past liquidation, entries with unresolved reconciliation flags, and AD/CVD entries with issued liquidation instructions — may be addressed in future CAPE phases. CBP has not yet announced a timeline for Phase 2.

For entries with unresolved protests, importers can request removal of the suspended protest status from their CBP processing center, then withdraw and resubmit through CAPE once the suspension is lifted.

What You Need Before Filing

Before submitting a CAPE Declaration, importers and brokers should confirm the following are in place:

• ACE Portal account: the IOR or authorized broker must have an active ACE Portal account. Instructions for establishing an account are available on CBP’s IEEPA refund page
• ACH refund enrollment: bank account information for refunds must be registered in ACE specifically for refund purposes — separate from ACH enrollment for duty payments
• Entry list: a complete list of entry numbers with IEEPA duties paid, formatted as a CSV file per CBP’s CAPE Declaration template, available through the CAPE tab in ACE
• Authorization: only the IOR or the licensed customs broker who originally filed the entries can submit a CAPE Declaration for those entries

Early reports after the April 20 launch indicated some importers experienced technical difficulties accessing the portal and reaching CBP support. If you encounter issues, CBP’s trade support resources and your licensed customs broker are the appropriate channels for resolution.

Need Help with Your CAPE Filing?

Euro-American Worldwide Logistics’ licensed customs brokerage team is available to assist importers and IORs with identifying eligible entries, preparing CAPE Declarations, and navigating the ACE Portal filing process. If you have questions about your IEEPA refund eligibility or the CAPE submission process, contact us.