Q&A: Supply Chain Fallout From Iran War, Tariff Uncertainty

Key Takeaways

• Airspace closures force pharma shipments onto longer, costlier routes
• Fuel surcharges rise sharply as Strait of Hormuz remains closed
• Supreme Court limits presidential tariff power, creating compliance uncertainty
• Companies audit HTS codes to identify refundable tariffs and exposure

Pulse Analysis

The sudden escalation of the Iran conflict has sent shockwaves through the pharmaceutical logistics ecosystem. With the Strait of Hormuz shut and large swaths of regional airspace declared no‑fly zones, carriers are rerouting cargo through longer paths that erode the speed advantage of air freight. Fuel surcharges, already volatile, have spiked as airlines burn more gallons to circumvent the closure, inflating the cost of temperature‑controlled shipments that are critical for clinical‑trial material and finished drugs. Capacity constraints on both air and ocean lanes further tighten the supply chain, prompting manufacturers to hold additional inventory of key intermediates and to renegotiate carrier contracts.

Compounding the operational strain, the Supreme Court’s decision in Learning Resources, Inc. v. Trump stripped the president of unilateral tariff‑imposition powers under the International Emergency Economic Powers Act. While existing duties under Sections 122 and 301 remain, the ruling creates a fragmented regulatory landscape where biopharma firms must quickly identify which tariffs are still enforceable. Dan Bell of Marken advises a granular audit of HTS codes, immediate pursuit of refunds for overturned duties, and proactive engagement with customs brokers to navigate the ambiguous protest window. The uncertainty around future tariff adjustments forces companies to embed scenario‑planning into their financial models, ensuring agility in a rapidly shifting policy environment.

Strategically, the twin pressures are reshaping where and how new drugs are developed and launched. Sponsors are weighing the feasibility of U.S.‑centric clinical trials against the risk of cost volatility, with some opting to delay U.S. cohorts or shift early‑phase work to Europe or Asia, where regulatory frameworks and incentives may offer greater stability. While the Drug Supply Chain Security Act and the EU’s Falsified Medicines Directive remain separate compliance obligations, the added financial burden of meeting these standards under heightened tariff and fuel costs could accelerate a broader diversification of manufacturing footprints. In the long term, firms that build resilient, multi‑regional supply networks and maintain robust customs intelligence will be better positioned to weather geopolitical turbulence and protect product pipelines.