Future US Tariffs Could Target Australian Drug Makers

March 15, 2025 | News

Australia’s vibrant pharmaceutical export sector faces potential challenges as the United States government considers implementing new tariffs on Australian products, according to an analysis from a local think tank.

Recently, President Donald Trump announced a 25 percent tariff on Australian steel and aluminum imports, which dashed hopes for an exemption following a positive discussion with Prime Minister Anthony Albanese in February.

In addition to the steel and aluminum tariffs, the president has hinted at further tariffs aimed at protecting American agricultural interests. This development has raised concerns among Australian farmers, particularly within the $17 billion red meat industry.

As highlighted by Lowy Institute Fellow Jenny Gordon, various Australian sectors that export to the US, including pharmaceuticals, are not immune to these tariff threats. “Vaccines are a significant concern in this context,” Dr. Gordon stated. She also noted that mechanisms like the Pharmaceutical Benefits Scheme (PBS) might face increased scrutiny alongside the potential imposition of tariffs.

The Australian government is reportedly preparing for possible tariffs affecting the pharmaceutical sector as early as April. Australia currently exports around $1 billion worth of pharmaceuticals to the United States each year, making it a key player in this trade segment.

The broader Australian health and life sciences industry is valued at approximately $5.6 billion annually, making it one of Australia's largest export sectors and employing around 260,000 people.

Despite the evident risks, Dr. Gordon pointed out that implementing tariffs on specialized products like pharmaceuticals may be challenging for the US. “It may take time for US manufacturers to increase production to meet demand,” she remarked.

Economist Tim Harcourt from the University of Technology shared his perspective, indicating that President Trump seems focused on ‘bringing American jobs back’ and is targeting high-profile blue-collar industries for tariff imposition. He identified sectors such as manufacturing and agriculture as primary targets, which likely have significant support for Trump’s policies.

In contrast, Harcourt expressed the view that Australia might not be the primary target for tariffs this year, suggesting that Europe and Asian countries are more likely candidates.

While the Australian government has decided against retaliation through counter-tariffs against the US, Prime Minister Albanese announced plans to support a “buy Australian” initiative in the upcoming federal budget on March 25.

Education Minister Jason Clare compared the US tariff decision to “poking one of your best mates in the eye,” emphasizing that taking retaliatory measures would only hurt Australian consumers. “Retaliating would mean higher costs on goods for Australians,” he explained.

Clare also encouraged exploring other markets for products that could be impacted by US tariffs while simultaneously working with the US to eliminate these new duties.

tariffs, pharmaceuticals, exports