Duties, Taxes, and Tariffs in the Life Sciences Industry: What You Need to Know

The life sciences sector—spanning pharmaceuticals, medical devices, and biotechnology—is one of the most globally interconnected industries. Companies often source, manufacture, and distribute products across multiple borders, making it essential to understand the rules governing duties, taxes, and tariffs. These aren’t just financial considerations—they directly affect compliance, operational efficiency, and product availability.

At Euro-American Worldwide Logistics, we’ve been helping life sciences companies navigate these complexities for decades. Here’s a breakdown of what these terms mean and how they impact your supply chain.

Understanding the Basics

Duties

Duties are government-imposed taxes on imported or exported goods. For life sciences, this can apply to everything from raw pharmaceutical ingredients to finished medical devices and lab equipment. Rates vary based on product classification and country of origin.

Example: Importing active ingredients from India to the U.S. will carry a duty based on the correct Harmonized System (HS) code assigned to the product.

Taxes

In addition to duties, other taxes may be involved—such as Value Added Tax (VAT) or Goods and Services Tax (GST)—which can apply at different stages of the supply chain.

Example: A biotech firm in Europe selling a medical device to a U.S. hospital may still be subject to VAT depending on the jurisdictions involved.

Tariffs

Tariffs are a type of duty aimed at protecting local industries, regulating trade, or generating revenue. Recent trade disputes have made tariffs a major factor in life sciences supply chains.

Example: If the U.S. imposes tariffs on Chinese-made medical devices, the cost to import them rises—potentially impacting pricing for healthcare providers and patients.

Why They Matter in Life Sciences Logistics

Increased Costs

Duties and tariffs raise the landed cost of goods, influencing pricing, profitability, and competitiveness.

Example: A higher tariff on imported diagnostic equipment could force hospitals to pay more or delay upgrades.

Complex Compliance

Life sciences shipments must meet strict documentation and regulatory requirements, including proper classification and proof of compliance with local standards. Missing paperwork can result in penalties or delays.

Trade Agreement Impacts

Changes to trade agreements can either reduce or increase costs overnight. A favorable agreement can open new opportunities, while a dispute can create sudden headwinds.

Supply Chain Disruptions

Unexpected changes in tariff policy can delay critical shipments, cause shortages, or disrupt production schedules.

Strategies for Navigating Duties, Taxes, and Tariffs

  1. Stay Informed on Policy Changes: Regulations shift frequently. Partner with a reliable customs broker or compliance expert to anticipate and adapt quickly.
  2. Leverage Free Trade Agreements (FTAs): Understand which products qualify for preferential duty rates under existing agreements between the countries you operate in.
  3. Ensure Accurate Product Classification: Using the correct HS codes avoids overpayment, penalties, and compliance issues.
  4. Consider Tariff Engineering: Adjusting product design or sourcing to reduce tariff exposure can be a viable, legal strategy when done with expert guidance.
  5. Build Supply Chain Flexibility: Diversifying suppliers and transportation routes can help reduce reliance on a single country or port of entry.

What to Avoid

  • Misrepresenting Country of Origin: Routing goods through another country to mask their origin is illegal and can lead to fines and seizures.
  • Misclassification: Assigning the wrong HS code to pay lower duties carries significant legal and financial risks.
  • Undervaluation: Declaring a false lower value to reduce duty payments is considered tax fraud.

Final Takeaway

For life sciences companies, duties, taxes, and tariffs are more than accounting line items—they shape the competitiveness, compliance, and stability of your supply chain. By staying informed, using the right trade agreements, classifying products correctly, and working with a trusted logistics partner, you can minimize risk and keep your operations running smoothly.

Need help navigating complex customs and regulatory environments?

Euro-American Worldwide Logistics offers specialized, compliant, and efficient solutions for life sciences shippers. Let’s talk about how we can streamline your global operations.