Donald Trump’s tariffs announcement threatens to impose duties as high as 200% on foreign pharmaceuticals, signalling a dramatic escalation in his trade war policies. The former president declared that drug manufacturers would be given time to relocate their operations to the US before facing these punitive tariffs.
Additionally, the announcement included a 50% tariff on imported copper in a bid to strengthen domestic production of the metal. This declaration has already sent shockwaves through global markets, with US copper prices surging 12% to record levels.
The stakes are particularly high for Australia. Last year, Australia exported $US1.4 billion ($2.2 billion) in pharmaceutical products to the US, representing more than 40% of its total pharmaceutical export value of $US3.2 billion ($4.9 billion). Although copper exports to the US account for less than 1% of Australia’s copper exports, officials have expressed greater concern about the potential impact on the pharmaceutical sector.
Why Trump is escalating his trade war with new tariffs
The latest round of tariff hikes represents a calculated expansion of President Trump’s “America First” trade strategy, which aims to address what he perceives as unfair trade practices by foreign nations. During a cabinet meeting at the White House, Trump explicitly framed these measures as part of his plan for “reciprocal” tariffs designed to match or exceed those placed on American goods by other countries.
At the core of Trump’s escalation is a national security argument. The administration has consistently invoked Section 232 of the Trade Expansion Act of 1962, granting the presidents authority to adjust imports based on national security grounds. For pharmaceuticals specifically, Trump has expressed concerns about overreliance on foreign drug manufacturing, arguing that the United States needs more domestic production to ensure it doesn’t depend on other countries for essential medicines.
The pharmaceutical tariff announcement follows an investigation launched by the Department of Commerce in April 2025 under Section 232, targeting “both finished generic and non-generic drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients and key starting materials, and derivative products”. Commerce Secretary Howard Lutnick indicated the investigation would be completed by the end of July.
Regarding copper, Trump’s decision comes after his Commerce Department concluded its investigation, with Lutnick stating, “Copper is finished. We’re done with our study. We’ve handed the study over to the president”. The 50% tariff aligns copper with existing duties on steel and aluminium imports.
Furthermore, these tariffs build upon previous actions in Trump’s broader trade agenda. Since returning to office, he has imposed a 10% baseline tariff on all countries, added reciprocal tariffs on nations with large trade deficits with the US, increased steel tariffs to 25%, and elevated aluminium tariffs to 25%.
Trump seems to be using tariffs as leverage to pressure pharmaceutical companies to move their production to the United States by granting them a grace period, claiming that they need time to “get their act together.”
What the new tariffs mean for global markets and supply chains?
Global markets reacted swiftly following the pharmaceutical and copper tariff announcements. US copper futures jumped more than 12% to record highs, whilst shares of Freeport-McMoran, America’s largest copper producer, shot up by over 5%. In contrast, overall stock market reaction remained relatively muted, with major indices falling less than 1%.
These tariffs pose substantial risks to highly integrated global supply chains. Currently, the US imports 75% of its essential medicines and relies on China for approximately 80% of active pharmaceutical ingredients (APIs). For generic antibiotics, this dependence rises to 90%. The looming 200% pharmaceutical tariffs would severely disrupt the movement of essential raw materials, active ingredients, and finished medications.
The economic consequences would be far-reaching. Should all announced rates take effect, the weighted average tariff for goods from Asia would jump from 4.8% to 27%. Companies across supply chains would face compressed profit margins, leaving less money for wages and growth investments.
Healthcare systems appear especially vulnerable. A recent survey revealed that 88% of healthcare executives predict an 18% increase in medical equipment costs by late 2025, while 97% anticipate pharmaceutical costs will rise by at least 15%. Hospitals and pharmacies would struggle to maintain consistent inventories, potentially triggering panic buying that creates localised shortages and unequal access to treatments.
The situation has prompted international recalibration of trade relationships. Following Trump’s tariff letters, South Africa urged its negotiators to “accelerate diversification efforts”. Similarly, Malaysia finds itself caught between maintaining US trade and seeking alternatives. India’s pharmaceutical sector faces particular exposure, as its $9.8 billion in pharmaceutical exports to the US represents 40% of its total pharma exports.
According to experts, reshoring production offers no quick fix—building new pharmaceutical manufacturing facilities typically requires 5-10 years and up to $2 billion in investment.
How governments and industries are preparing for impact?
Nations and industries have mobilised swiftly in response to Donald Trump’s tariffs announcement, with affected countries making urgent diplomatic outreach. Australia’s Treasurer Jim Chalmers confirmed the country is “urgently seeking more detail” on the pharmaceutical tariff threat, noting that the sector is “much more exposed” to the US market.
For Australia, the stakes are considerable—pharmaceutical exports to the US totalled approximately AUD 3.21 billion last year. Nevertheless, the Australian government has firmly ruled out any compromise on its Pharmaceutical Benefits Scheme (PBS), which the US pharmaceutical lobby has labelled “egregious and discriminatory”. Chalmers stated unequivocally, “Our Pharmaceutical Benefits Scheme is not something we’re willing to trade away or do deals on”.
Amid growing diplomatic tensions, the Australian opposition has criticised the government’s approach. Shadow Trade Minister Kevin Hogan called it “frankly embarrassing” that Australia’s prime minister has yet to secure a meeting with President Trump.
Concurrently, drug manufacturers have begun lobbying for phased implementation, arguing that relocating production requires “a major commitment of resources and could take years”. The Pharmaceutical Research and Manufacturers of America (PhRMA) warned through spokesman Alex Schriver that “every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments”.
President Trump has indicated some flexibility in the timeline, suggesting manufacturers would receive “around a year or a year and a half’s notice”. Commerce Secretary Howard Lutnick clarified that final decisions on pharmaceutical tariffs “will come at the end of the month” after completing studies.
Currently, many countries are racing against time to secure deals before the expanded tariff regime takes effect on 1 August. Trump sent letters to leaders of 14 countries on Monday, warning them of new levies ranging from 25% to 40%. He has also threatened an additional 10% tariff for any country aligned with BRICS.
Industry analysts predict these measures could ultimately result in drug shortages and reduced patient access, fundamentally restructuring global pharmaceutical supply chains.
Conclusion – Donald Trump’s tariffs announcement
The implications of Trump’s latest tariff announcements stretch far beyond immediate market reactions. The proposed 200% duties on pharmaceuticals and 50% tariffs on copper undoubtedly represent one of the most aggressive trade policy shifts in recent years. Australia faces particularly significant challenges given its $2.2 billion pharmaceutical export relationship with the United States, which constitutes over 40% of its total pharmaceutical export value.
Though Trump has offered manufacturers time to relocate operations to American soil, experts point out the substantial barriers to reshoring pharmaceutical production. The process typically requires 5-10 years and billions in investment, therefore making immediate compliance virtually impossible. Consequently, healthcare systems worldwide might experience rising costs, with medical equipment prices projected to increase by 18% and pharmaceutical costs by at least 15% before year’s end.
Countries caught in this escalating trade conflict must balance diplomatic engagement with diversification strategies. Australia has already drawn a firm line regarding its Pharmaceutical Benefits Scheme despite ongoing discussions. Similarly, nations like India, with its $9.8 billion pharmaceutical export relationship with the US, face difficult decisions about future trade alignments.
The ripple effects of these tariff announcements will likely reshape global supply chains for years to come. While copper prices have already surged to record levels, the full impact on pharmaceutical supplies remains uncertain. Nevertheless, the message from the Trump administration appears straightforward – the “America First” trade strategy continues to gain momentum, regardless of international dependencies or established trade relationships. Until final decisions emerge at month’s end, governments and industries alike must prepare for significant adjustments to the global trading landscape.
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What are the main tariffs announced by Trump?
Trump has announced a 200% tariff on foreign pharmaceuticals and a 50% tariff on imported copper. These tariffs are part of his “America First” trade strategy and are framed as national security measures.
How might these tariffs affect healthcare costs?
Healthcare costs are expected to rise significantly. Medical equipment costs are predicted to increase by 18%, while pharmaceutical costs are anticipated to rise by at least 15% by the end of the year. This could lead to potential drug shortages and reduced patient access.
What is Australia’s stance on the pharmaceutical tariffs?
Australia is seeking more details about the tariff threat, as pharmaceutical exports to the US totalled approximately AUD 3.21 billion last year. However, the Australian government has firmly stated that it will not compromise on its Pharmaceutical Benefits Scheme.
How are pharmaceutical companies responding to the tariff announcement?
Pharmaceutical manufacturers are lobbying for phased implementation of the tariffs, arguing that relocating production to the US requires significant time and resources. They warn that tariffs could divert funds from investment in American manufacturing and drug development.
What are the potential global impacts of these tariffs?
The tariffs could significantly disrupt global supply chains, especially in the pharmaceutical sector. Countries may need to recalibrate their trade relationships, and there could be a fundamental restructuring of global pharmaceutical supply chains. The full impact on pharmaceutical supplies remains uncertain, but it’s likely to reshape the global trading landscape.