Fears Trump will hit vital Aussie industry
Trump’s global tariff rampage could hit a key industry in Australia with fears it could push up prices for essential medicines.
Economy
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Fears have been raised that Australia’s billion dollar pharmaceutical export industry could be the next sector hit in US President Donald Trump’s tariff rampage, which could impact the prices of essential medicines for Aussies.
This week the Trump administration confirmed plans to slap 25 per cent tariffs on steel and aluminium imports, despite initial hopes that Australia would receive an exemption.
Prime Minister Anthony Albanese has previously slammed US President Donald Trump’s big call on tariffs as “unjustified” and an act of “self-harm” as he revealed he would not engage in a game of tit-for-tat trade action.
But now there are concerns Australia’s pharmaceutical exports to the US are in the firing line, which are worth approximately $1.1 billion in 2024, according to industry estimates.
The pharmaceutical industry is one of Australia’s biggest export industries.
The new threat could have a knock on effect on Australia’s $18 billion federal government scheme that cuts the cost of essential medicines.
US companies have complained for years about the impact on their profits from Australia’s drug bargaining via its subsidy scheme for medicines.
Warnings have been issued that US companies could reignite campaigning to scale back the Pharmaceutical Benefits Scheme (PBS) to increase their profits.
“Australians’ health shouldn’t be reduced to a bargaining chip in a trade war with the Trump administration,” Consumers Health Forum of Australia chief Elizabeth Deveny told the Sydney Morning Herald.
“There is both a health and economic argument here. A healthy Australia leads to a higher economic participation and more productive Australia. Our economy can’t afford to have a sick Australia.
“For a very long time, Australians have emphatically said that they don’t want to go down the path of a US-style healthcare system.”
The PBS has been crucial at cutting the cost of 930 medications in Australia in the last financial year.
In his first term as President, Mr Trump repeatedly blamed the high price of US medicines in part on foreign countries that take advantage of the significant American investment in medical research without paying their fair share.
However, the US does not have a subsidy scheme for medicines like many other countries.
“As part of President Trump’s bold plan to put American patients first, HHS is focused on solving a number of the problems that plague drug markets, including … foreign governments free-riding off of American investment in innovation,” Health and Human Services Secretary Alex Azar said at the time.
Australian Fair Trade and Investment Network convener Patricia Ranald also believes the Trump administration could target the PBS scheme this time around, arguing Trump’s executive order raised non-tariff barriers as part of US objections.
“So the PBS comes under the heading of a non-tariff barrier, in their view. I think it’s vital for the government to take a firm line,” she told the SMH.
“The US is weaponising tariffs in order to influence the domestic policies of other countries. I don’t think it’s a reasonable ask for the Americans to say, well, you should change your PBS system in order to pay our drug companies more.”
Mr Albanese has so far ruled out Australia imposing retaliatory tariffs.
“Australia has no tariffs on goods from the United States and, of course, we have an agreement with the United States.
“Tariffs and escalating trade tensions are a form of economic self-harm and a recipe for slower growth and higher inflation.
“They are paid by the consumers. This is why Australia will not be imposing reciprocal tariffs on the United States. Such a course of action would only push up prices.”
Trade Minister Don Farrell said he was “deeply concerned” over the chance of a new wave of food and pharmaceutical tariffs hitting Australian exporters on April 2.
President Trump has been refusing Mr Albanese’s request for a follow up phone call over the decision to slap trade tariffs on Australia.
The Prime Minister first spoke to Mr Trump about the tariff threat in February when he revealed he had a “very constructive” phone call with the US President, with Mr Trump agreeing to consider an exemption to tariffs.
But asked why he had not had another call with Mr Trump after confirmation there would be no tariff reprieve, Mr Albanese revealed it was not for want of trying.
“We have mobilised everything at our disposal, including through our embassy in the United States, but also through all channels and we will continue to do so,” Mr Albanese said today.
Asked if he had tried to organise a second call with Mr Trump on tariffs, Mr Albanese revealed he had asked to do so.
“Look, we will continue to engage in all vehicles we have continued to put in a request for another discussion with President Trump,” he said.
Originally published as Fears Trump will hit vital Aussie industry
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