Trump rattles investors with new tariffs on pharmaceuticals, trucks and kitchen cabinets – business live

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Truck maker shares hit by tariffs

Shares in some European truckmakers have fallen in early trading, after Donald Trump announced a 25% tariff on imports of all heavy-duty trucks.

Daimler Trucks, the major commercial vehicle manufacturer, has dropped by around 4%.

The Traton Group, whose brands include Scania, MAN, International, and Volkswagen Truck & Bus, are down 2.1%.

Neil Shearing, group chief economist at Capital Economics, says Mexico could be most affected by the new tariffs:

The US sources 78% of heavy truck imports from Mexico and 15% from Canada, so a key question is whether there will be exemptions for USMCA-compliant products.

This is unclear at present, but it’s worth noting that most product-specific tariffs (with the exception of auto parts) have not had USMCA exemptions. If there’s no USMCA exemption, then Mexico will be most heavily affected by the large truck tariffs.

UK pharma stocks drop

Shares in UK pharmaceuticals giant AstraZeneca have dropped by 1.4% at the start of trading in London.

AstraZeneca are the biggest faller on the FTSE 100 share index.

That’s a slight surprise (to me, anyway), as AstraZeneca recently announced it will invest $50bn (£37bn) in the US by 2030. That ought to satisfy Trump’s position that taxes could be avoided by companies if they built manufacturing plants in America.

Kathleen Brooks, research director at XTB, explains:

UK Pharma giant AstraZeneca could be better placed than some of its European rivals, due to promised extra investment in the US that has already been announced, and the President’s promise to treat the UK differently when it comes to pharma tariffs.

Thus, the FTSE 100 could be a relative ‘safe haven’ in the middle of this latest tariff storm.

Shares in fellow pharma firm GSK are close behind, -0.9%.

The overall FTSE 100 is flat in early trading.

As tariffs are paid by importers, not exporters, Trump’s new levies could sharply push up the cost of some medicines for Americans.

Pascal Chan, vice-president for strategic policy and supply chains at the Canadian Chamber of Commerce, warned that the tariffs could harm Americans’ health with “immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or foregoing essential medicines”.

“We are already being crushed by the highest prescription drug costs in the world and this will cause them to skyrocket further,” 314 Action, a US advocacy group that tries to elect scientists to office, said in a statement.

“If [Trump] goes through with these tariffs, people across the country will die.”

More here:

Introduction: Trump rattles markets with new tariffs on pharmaceuticals, trucks and kitchen cabinets

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Donald Trump has opened up a new front in his global trade wars, jolting investors.

Overnight, the US president announced tariffs of 100% on medicines and pharmaceutical goods imported into the US, dropping a shoe that had been dangling over the pharma industry for months.

In a wide-ranging move, Trump also announced 25% tariff on imports of all heavy-duty trucks, 50% tariffs on kitchen cabinets, a 50% tariff on bathroom vanities and a 30% tariff on upholstered furniture, with all the new duties taking effect from 1 October.

The tariffs announced by Trump do not apply to generic pharmaceuticals, and companies will be exempt if they have begun constructing new manufacturing facilities in the US.

Trump claimed the taxes on imported kitchen cabinets and sofas were needed “for National Security and other reasons”.

He said the new heavy-duty truck tariffs were to protect manufacturers from “unfair outside competition” and said the move would benefit companies such as Paccar-owned Peterbilt and Kenworth and Daimler Truck-owned Freightliner.

He added:

“We need our Truckers to be financially healthy and strong, for many reasons, but above all else, for National Security purposes!”.

The announcement has given investors “a fresh reminder about the trade war, and the impact has already been evident in Asian markets,” reports Jim Reid, market strategist at Deutsche Bank.

Shares in Asia-Pacific companies with exposure to the US market have dropped today - Japan’s Sumitomo Pharma are down 4.6%, and Austalia’s biotechnology firm CSL have lost almost 2%.

Shares in Europe’s biggest pharma companies are also set to fall when trading begins; Novo Nordisk, Roche, Novartis and Astrazeneca are down betweeen 1.8% and 2% on the Tradegate platform, Reuters reports.

That’s despite the EU agreeing a trade deal with the US which appears to limit tariffs on pharma and semiconductor exports to 15%, in line with most other sectors in the trade deal.

The crackdown on kitchen cabinets has hit stocks too; an index tracking Chinese-listed furniture makers has dropped around 1%.

New US inflation data, due this afternoon, will show whether the trade war is pushing up the cost of living for Americans.