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Labor is making urgent representations to the White House about Donald Trump’s threat to impose 200% tariffs on drug imports to the US, an announcement Jim Chalmers says is very concerning for the Australian economy.
The US president said on Wednesday that the punishing new border levies would come with a transition period that could last more at least a year, after sustained pressure from the US pharmaceutical industry over price controls on common drugs in countries like Australia.
“We’ll be announcing something very soon on pharmaceuticals,” Trump said.
“We’re going to give people about a year, year and a half to come in, and after that they’re gonna be tariffed if they have to bring the pharmaceuticals into the country at a very high rate, like 200%.”
Trump, who this week delayed the lifting of a pause on his so-called “retaliatory tariffs” against more than 100 countries until 1 August, also announced a plan to hit copper imports into the US with a 50% tariff.
Australia’s copper exports to the US are worth about $50m annually and make up less than 1% of total sales of the metal.
But Australia exports about $2.5bn in pharmaceutical (mainly vaccines and blood products) as well as healthcare products to the US each year – a share of about 40% of medicines exports across the globe annually.
This week Guardian Australia reported some of the most influential lobby groups in Washington were pushing the US to retaliate against Australia’s treatment of US exporters under the $18bn pharmaceutical benefits scheme, pointing to drug approvals and domestic manufacturing incentives as proof of unfair “freeloading”.
The PBS keeps prices for nearly 1,000 commonly used medicines capped, with supply deals negotiated with drug companies to ensure access to life-saving drugs.
The treasurer said the plan to impose tariffs on foreign pharmaceuticals and copper were “very concerning developments”.
“Our pharmaceuticals industry is much more exposed to the US market, and that’s why we’re seeking, urgently seeking, some more detail on what’s been announced,” Chalmers told ABC radio.
“But I want to make it really clear once again, as we have on a number of occasions before, our pharmaceutical benefits scheme is not something that [we are] willing to trade away.”
Lobby groups including the US Chamber of Commerce and the Pharmaceutical Research and Manufacturers of America have told the US trade representative, Jamieson Greer, that the system is discriminatory and “socialised medicine”.
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Chalmers said growing global trade tensions linked to Trump’s unpredictable and expanding tariff regime were a “substantial concern” to Australia.
“It does pose a risk to the progress that the world has been making in our economies after Covid,” he said.
“We’ve made it really clear on a number of occasions, these tariffs are bad for Australia. They’re bad for the US. They’re bad for the global economy.
“These developments, they are sometimes unpredictable. There’s been an element of volatility and uncertainty injected into the global economy.”
Trump this week sent letters of demand to 14 US trading partners, including Japan and South Korea, warning them of the 1 August deadline.
Australia had not received a letter as of Wednesday, though Trump flagged then that additional letters would be sent in the next “short period of time”.
“As per letters sent to various countries yesterday, in addition to letters that will be sent today, tomorrow, and for the next short period of time, TARIFFS WILL START BEING PAID ON AUGUST 1, 2025,” he said.
“There has been no change to this date, and there will be no change. In other words, all money will be due and payable starting AUGUST 1, 2025 - No extensions will be granted. Thank you for your attention to this matter!”
The US commerce secretary, Howard Lutnick, told CNBC he expected the copper tariffs to be put into place as soon as the end of July or sometime in early August.
