Treasurer Jim Chalmers is “urgently” seeking clarity about a proposed 200% U.S. tariff on pharmaceutical products.
Official data shows Australia’s exports of medicines to the U.S. were valued at $AU2.05 billion last year.
U.S. President Donald Trump has indicated he could raise taxes on imports of certain products, including medicines, on top of his current tranche of tariffs.
Here’s the latest.
Tariffs
A tariff is a tax on imports. It’s applied to foreign-made goods brought into another country and paid by the importer.
For example: Country A and Country B make the same product. Country A wants its citizens to buy its own version of the product, not Country B’s, so it applies a tariff.
Importers in Country A now pay the tax when they bring in B’s product, and pass on the cost to consumers, making this version of the product more expensive to buy.
Products
Since returning to office earlier this year, Trump has implemented new tariffs on countries.
In April, he imposed a “baseline” 10% tariff on all countries, including Australia, and levied higher rates on certain countries.
Trump also imposed 50% tariffs on steel and aluminium imports.
Trump has hinted at placing a tariff on other industries – such as films produced outside the U.S. – but hasn’t followed through yet.
Pharmaceutical
Medicines and pharmaceuticals rank among Australia’s top exports to the U.S.
In 2024, these exports were worth $2.05 billion, according to the Australian Bureau of Statistics, and represented about 40% of Australia’s total medicinal exports.
Ahead of a meeting with his top officials, Trump told reporters he was considering a 200% tariff on imports of pharmaceuticals. He flagged an announcement was coming “very soon”.
Your contribution ensures The Daily Aus can continue doing the work you love.
I want to give $10 monthly to help TDA keep doing the news.
Your details:
Trump said there would be a buffer of between 12 to 18 months for pharmaceutical companies to move to the U.S. before tariffs would be imposed.
“We’ll give [drug companies] a certain period of time to get their act together,” he said.
If the tariffs are imposed on Australian companies, it would effectively act as a trade embargo, as the cost of doing business in the U.S. would increase significantly.
Commerce Secretary Howard Lutnick told American outlet CNBC that a study on medicine tariffs is due to be handed down at the end of July.
PBS
Trump said there would be a buffer of between 12 to 18 months for pharmaceutical companies to move to the U.S. before tariffs would be imposed.
“We’ll give [drug companies] a certain period of time to get their act together,” he said.
If the tariffs are imposed on Australian companies, it would effectively act as a trade embargo, as the cost of doing business in the U.S. would increase significantly.
Commerce Secretary Howard Lutnick told American outlet CNBC that a study on medicine tariffs is due to be handed down at the end of July.
Government
Treasurer Jim Chalmers described Trump’s latest remarks on pharmaceuticals as “very concerning developments”.
“Our pharmaceutical industry is much more exposed to the US market. And that’s why we’re urgently seeking some more detail on what’s been announced,” Chalmers told the ABC.
He said the PBS will not be impacted by any tariff measures, despite U.S. pressure.
Opposition
Shadow Trade Minister Kevin Hogan called the proposed tariffs a “serious escalation”.
Hogan criticised Prime Minister Anthony Albanese for failing to lock in a meeting with Trump, after the President cancelled their scheduled meeting on the sidelines of last month’s G7 summit during Israel’s war with Iran.
“Australian exporters are facing uncertainty with no resolution since tariffs were imposed earlier this year and no voice at the table fighting for them,” Hogan said in a statement.
