Donald Trump has announced that the US will soon impose a major tariff on pharmaceuticals, aiming to encourage major manufacturers to relocate to America. This move may further strain relations with Australia, where there is a concern over the Pharmaceutical Benefits Scheme (PBS), a subsidized medicine system.
Trump’s announcement comes after US Trade Representative Jamieson Greer suggested that the US should increase tariffs to address a broader $1.2 trillion trade deficit with the rest of the world. While the US maintains a trade surplus with Australia, Trump and Greer believe that tariffs could generate money to compensate for the US’s overall trade deficit.
In a speech, Trump referenced many countries, including Australia, that have subsidized medicine systems, such as the PBS. US pharmaceutical companies have long been critical of the PBS, claiming that Australians pay too little for medicine considering the billions invested in research and development.
Australian experts argue that tariffs will unlikely significantly impact the PBS unless they become part of a larger trade or political deal. However, if tariffs are applied to drugs exported from Australia to the US, this could make Australian drugs more expensive, reduce demand, and encourage manufacturers to move overseas.
Australia exports about $2 billion worth of pharmaceuticals to the US each year. The imposition of tariffs on pharmaceuticals may strain diplomatic relations with Australia, where the Prime Minister Anthony Albanese and Opposition Leader Peter Dutton have said the PBS is “not up for negotiation” and that protecting it is “sacrosanct” in trade negotiations.
Greer’s comments have prompted criticism from some, including Senator Mark Warner, who accused the Trump administration of unfairly targeting one of its strongest allies. The prime minister echoed concerns over the reciprocity of such tariffs, stating that Australia has a better arrangement than other countries and that imposing a 10% tariff is unfair.
Source: https://www.theguardian.com/australia-news/2025/apr/09/donald-trump-flags-major-tariff-on-pharmaceuticals-as-us-senator-criticises-whack-on-australia
