Donald Trump has threatened to hit pharmaceutical goods with a fresh round of tariffs in what would be a significant blow to Australia.
Pharmaceuticals were exempted from the wide-ranging so-called “reciprocal” tariffs unveiled last week, but in a speech this morning, the US president said there would soon be a new round of import taxes specifically targeting the sector.
“We’re going to be announcing, very shortly, a major tariff on pharmaceuticals,” Trump told a National Republican Congressional Committee dinner.
READ MORE: Super-sized interest rate cut within weeks ‘can’t be ruled out’
“And when they hear that, they will leave China, and they will leave other places because more of the product is here.”
Pharmaceuticals is one of Australia’s largest exports to the United States, worth around $1.6 billion a year.
However, American manufacturers have long opposed the Pharmaceutical Benefits Scheme (PBS) in part because it limits the price customers pay for listed drugs, a point Trump raised in his speech without mentioning Australia by name.
READ MORE: The severe penalties for anyone caught voting twice
“These other countries are smart, they say you can’t charge more than $88 otherwise you can’t sell your product and the drug companies listen to them,” he said.
“But we’re going to do something that we have to do. We’re going to put tariffs on our pharmaceuticals and once we do that, they’re going to come rushing back into our country because we’re the big market.”
Leading Australian pharmaceutical manufacturer CSL saw its share price dip about 5 per cent today.
READ MORE: ‘Fake science’: Australia’s tariff beef blows up in US Senate grilling
Both Anthony Albanese and Opposition Leader Peter Dutton have promised to keep the PBS out of trade negotiations with the US, and the prime minister reiterated that stance when asked about Trump’s latest threat.
“Our PBS is an essential part of who we are,” he said.
“We will never negotiate on it. We will never undermine it.”
Meanwhile, Trump’s ”Liberation Day” tariffs, including a 104 per cent levy on all Chinese imports, fully came into effect earlier today, sending Asian markets tumbling, with Japan’s Nikkei down about 5 per cent.
The 10 per cent baseline rate which Australia is subject to came into effect over the weekend, but the higher tax rates on dozens of countries – including 46 per cent on Vietnam, 32 per cent on Taiwan, 25 per cent on South Korea, 24 per cent on Japan and 20 per cent on the European Union – took hold this afternoon (AEST).
Treasurer Jim Chalmers paused his campaigning on the federal election trail this afternoon for an emergency meeting with Reserve Bank Governor Michele Bullock and other financial policymakers to discuss the implications of Trump’s tariffs and the escalating trade war on Australia.
“It’s a really good opportunity for us to confer with, compare notes with and coordinate our efforts with the regulators and others involved in the market right now,” Chalmers said ahead of the summit.
“We are confident that we can weather these global conditions, but we’re not complacent.”
DOWNLOAD THE 9NEWS APP: Stay across all the latest in breaking news, sport, politics and the weather via our news app and get notifications sent straight to your smartphone. Available on the Apple App Store and Google Play.
