Donald Trump threatens 200pc tariff on pharmaceuticals

The Albanese government is “urgently seeking” details on Donald Trump’s threat against Australia’s biggest exports.

The Albanese government is “urgently seeking” details on Donald Trump’s threat to slap tariffs of 200 per cent on pharmaceuticals and 50 per cent on copper, Jim Chalmers says.

Australia is among the world’s top copper producers, but the bulk of exports go to southeast Asia.

Last year copper exports to the US totalled just $55m.

Pharmaceuticals is another matter, with Australia’s exports to the US north of $2bn in 2024.

The Treasurer said on Wednesday that Washington’s latest announcement was “very concerning”.

Treasurer Jim Chalmers says the Albanese government is ‘urgently seeking’ details on newly floated US tariffs. Picture: Martin Ollman / NewsWire

“These are obviously very concerning developments,” Mr Chalmers told the ABC, adding that it had “been a feature of recent months that we’ve had these sorts of announcements out of DC”.

“It’s still early days. Obviously, we’ll make a more detailed assessment of what’s come out of the US in the usual way.”

With exports to the US accounting “for less than 1 per cent” of Australia’s copper exports, he said he was far more worried about pharmaceuticals.

“Much more concerning are the developments around pharmaceuticals,” Mr Chalmers said.

“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.

“But I want to make it really clear once again … our Pharmaceutical Benefit Scheme is not something that we’re willing to trade away or do deals on – that won’t change.”

The US President announced the new levies at a cabinet meeting overnight.

US President Donald Trump says he could slap eye-watering tariffs on two major Australian exports. Picture: Picture: Andrew Caballero-Reynolds / AFP

“I believe the tariff on copper – we’re going to make it 50 per cent,” Mr Trump told reporters, with officials later adding it would come into effect by August.

On pharmaceuticals, Mr Trump said the timeline could up to “a year and a half”, Mr Trump said.

“We’re going to give (drugmakers) about a year, a year and a half to come in, and after that, they’re going to be tariffed,” he said.

“They’re going to be tariffed at a very, very high rate, like 200 per cent.

“We’ll give them a certain period of time to get their act together.”

In a statement, opposition trade spokesman Kevin Hogan accused the Albanese government of failing Australia.

Opposition trade spokesman Kevin Hogan says Labor has failed Australia. Picture: Glenn Campbell / NewsWire

He said the US imposing duties on Australian pharmaceuticals “would be a serious escalation” and blasted the Prime Minister for not securing a meeting with Mr Trump.

“This should have been raised at the highest levels months ago,” Mr Hogan said.

“It is frankly embarrassing that our Prime Minister has still not secured a meeting with President Trump.

“I don’t believe the PM has done everything he can to advance this important relationship.”

He added that Labor had “dropped the ball and Australian businesses are paying the price”.

“This is about our national interest,” Mr Hogan said.

“The government’s inaction is hurting Australian families and businesses. It’s time for the Prime Minister to lead.”

The Trump has administration has been mulling further sectoral tariffs to impose on top of the baseline and so-called “reciprocal” rates.

Australia was not named among those facing reciprocal levies announced earlier this year and was instead subjected to the universal 10 per cent imposts on all foreign imports – a position Anthony Albanese has said he did not expect to change.

AUSTRALIA’S FRESH FEARS OVER TRUMP TARIFFS

Australia has avoided Donald Trump’s latest tariff threats, but is “concerned” about the global impact of the US President targeting key trading partners like Japan and South Korea.  

Mr Trump on Tuesday sent letters to more than a dozen countries outlining new tariff rates to come into effect from August 1 should those nations fail to negotiate favourable deals with the US.

So far only the UK and Vietnam have struck agreements with Mr Trump to avoid the so-called “Liberation Day” reciprocal tariffs initially announced in April, while countries like Japan and South Korea now face a 25 per cent tax on their exports to the US if they can’t make a deal this month.

US President Donald Trump has extended the start date of Liberation day tariffs to August. Picture: Samuel Corum/Getty Images

In the letters to world leaders, Mr Trump warned any retaliation to US tariffs would draw a like-for-like response.  

“If, for any reason, you decide to raise your tariffs, then, whatever the number you choose to raise them by, will be added on to the 25 per cent that we charge,” Mr Trump told Japan and South Korea in letters released on his Truth Social platform.

Australia is subject to a 10 per cent “baseline” tariff, which was the minium rate imposed on all US trading partners by Mr Trump earlier this year.

The nation’s steel and aluminium exporters have also been hit with an industry-specific tariffs of 50 and 25 per cent respectively, which only the UK has secured an exemption for so far. Treasurer Jim Chalmers has confirmed there has been “no change” to the US’ approach to Australia.

“We’re still subject to the lowest baseline rate” he said.

“We’ve made it very clear that we think these tariffs are bad for the US, bad for Australia and bad for the global economy.” Mr Chalmers said one of the things the Albanese Government was “most concerned” about was in addition to the direct impact on Australian workers and industries caused by this tariff, was the “impact on global demand more broadly”.

“That’s why we’ve been … at every opportunity, making the case that these tariffs are unjustified, they should be removed in line with our free trade agreement,” he said.  Anthony Albanese also reiterated his belief the tariffs should be removed, describing the taxes on Australian exports to the US as an “act of economic self-harm”.

“Tariffs are a penalty on the country that is imposing them, because what they require is for goods to be purchased with a tax on top, and the US has made that decision,” the Prime Minister said.

Coalition trade spokesman Kevin Hogan said a face-to-face meeting between Mr Albanese and Mr Trump was critical to Australia potentially resolving the trade issue.

“We need our Prime Minister to get in and eyeball Trump and say what you’re doing on tariffs is not okay,” he said.

“But he hasn’t been able to do that.” 

Donald Trump and Anthony Albanese share differing views on trade.

US TARIFFS ‘POSITIVE’ FOR ECONOMY

Meanwhile new figures show the direct impact of US tariffs on Australia would be “positive” for the economy in the long run, but the small benefit would be wiped out if there was a global trade war.

The nation’s economy could grow by 0.37 per cent of GDP as a direct result of cheaper imports from the rest of the world and increased Australian production fuelled by higher US tariffs on other countries, according to new modelling in the Productivity Commission’s annual Trade and Assistance Review released on Tuesday.

But if Australia was to retaliate to Mr Trump’s ten per cent tariff on all Australian imports and higher taxes on steel and aluminium, the nation’s GDP would be 0.14 per cent lower.

Despite the marginal benefit, the Commission warned global retaliation to Mr Trump’s tariffs “carries the risk of further escalation and ultimately worse outcomes for Australia”.

Mr Trump on Monday offered further reprieve to countries like China, Canada and European nations by delaying the slated start date for higher tariffs from July 9 to August 1.

Amid repeated postponements of the “Liberation Day” reciprocal tariffs first announced by Mr Trump in April, all exports to the US — including from Australia — have been hit with a 10 per cent tariff.

Productivity Commission deputy chair Alex Robson said the full suite of proposed US tariffs are likely to have a “relatively small direct effect” on Australia, but “the global uncertainty they’ve brought about could affect living standards”.

“Uncertainty is a handbrake on investment – when businesses are uncertain about the future, they are less likely to invest,” he said.

Dr Robson said further retaliatory escalation “could spiral into a broader trade war, which would bring serious consequences for Australia and the world”.

“Australia can promote long-term economic stability by continuing to talk the talk – and walk the walk – on free and open trade,” he said.

After dumping 457 so-called “nuisance tariffs” last term, the Albanese Government is now being urged to scrap a further 315 “urgent priority” taxes on things like boilers, iron, steel and plastics imported into Australia.

The Commission found compliance with these nuisance tariffs was costing up to $4 billion a year, while generating only about $2bn in revenue for Australia.

Treasurer Jim Chalmers said the report confirmed Australia would be best served by continuing to advocate for free and fair trade.

“And that’s exactly what we’ve done,” he said.
“Abolishing these nuisance tariffs is part of our substantial productivity agenda.”