By Nick Newling
US President Donald Trump’s threat to bring forward planned tariffs of up to 200 per cent on pharmaceuticals by a year to the end of the month has united Labor and the Coalition in their defence of the Pharmaceutical Benefits Scheme.
The announcement comes as a blow to Australia’s third-largest export to the United States, worth $2.2 billion last year, with the ASX suffering its biggest single-day fall since May.
Donald Trump has sent letters to a number of nations dictating the rates for tariffs on many imports.Credit: Bloomberg
Speaking from Washington on Tuesday (Wednesday AEST), Trump said he was intending to have tariffs “probably at the end of the month”, although when the suggested 200 per cent tariff would be enforced is unclear.
“We’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” he said.
Treasurer Jim Chalmers and Prime Minister Anthony Albanese are overseas but a government spokesperson pointed to the treasurer’s remarks last week, describing the Australian pharmaceutical industry as “exposed” but declaring the government would defend the PBS.
“Our Pharmaceutical Benefits Scheme is not something that we’re willing to trade away or do deals on. That won’t change,” Chalmers told Radio National last Wednesday when Trump first mentioned the 200 per cent figure.
“We see the PBS as a fundamental part of healthcare in Australia. We’re not willing to compromise the PBS. We’re not willing to negotiate or trade away what is a really important feature of the health system.”
Opposition spokesman for trade Kevin Hogan said on Wednesday that the Coalition intended to work with the government in a bipartisan manner to safeguard the PBS.
However, he said the prime minister had not “done everything he can to advance” Australian-American relations.
“This should have been raised at the highest level months ago. It is frankly embarrassing that our prime minister has still not secured a meeting with president Trump,” he said.
Following Donald Trump’s announcement, the Australian sharemarket plunged, with the ASX 200 falling by 77.2 points, or 0.8 per cent, with all 11 sectors in negative territory.
At a cabinet meeting this month, Trump said he planned to impose a 50 per cent tariff on copper by August 1, and that he expected pharmaceutical tariffs to grow as high as 200 per cent after giving companies a year to bring manufacturing back to the US.
Pharmaceutical products are the third-biggest category in Australia’s exports to the United States after beef and gold. The category includes plasma exports from biotech giant CSL, a company that also has large US operations.
The threat came after Trump sent letters to a number of nations unilaterally dictating the rates for tariffs on many imports while maintaining he would continue to carry out negotiations.
Earlier on Tuesday, Trump announced an agreement with Indonesia reducing the 32 per cent rate to 19 per cent. Indonesia agreed to purchase $US15 billion ($23 billion) in US energy, $US4.5 billion worth of agricultural products and 50 Boeing jets as part of the agreement, the US said.
Trump said representatives from the European Union, which faces a 30 per cent tariff, would be meeting with US negotiators this week. He said South Korea had indicated a willingness to “open” trade after his threats, while Japan had not.
With Bloomberg
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