Trump imposes 100% tariff on US pharmaceutical imports, Australia faces potential impact
Blow targets branded or patented drugs unless a US manufacturing plant is under construction; wider duties include cabinets, furniture and trucks as Australia and US approach high-stakes trade talks
The United States will impose a 100% tariff on branded or patented pharmaceutical imports starting October 1, 2025, unless a company is building a manufacturing plant in the United States. The move, the White House said, aims to protect American manufacturers from what it described as an influx of foreign-sourced drugs. The announcement followed a high-profile photo opportunity between U.S. President Donald Trump and Australian Prime Minister Anthony Albanese days earlier and comes ahead of a planned one-on-one meeting on October 20.
In addition to the pharmaceutical levy, Trump’s administration unveiled a broader tariff package, including a 50% import tax on kitchen cabinets, a 30% duty on upholstered furniture and a 25% tariff on heavy trucks. The president posted the policy on Truth Social, saying that the pharmaceutical tariff would not apply if a company is "breaking ground" or is "under construction" on a manufacturing facility in the United States, effectively defining construction as sufficient to trigger an exemption.
The administration stated the aim is to shield U.S. manufacturers from what it calls unfair outside competition and to rebalance drug pricing leverage. Officials argued that a surge of imported branded drugs has undermined domestic production capacity and raised concerns about supply resilience. The policy leaves some room for interpretation around what constitutes construction, stating that ground-breaking and/or active construction will qualify for exemption from the tariff.
Australia, for its part, faces potential economic effects given its status as a notable exporter of pharmaceutical products to the United States. Last year, Australian pharmaceutical exports to the U.S. totaled about $2.2 billion, roughly 40% of Australia’s total pharmaceutical merchandise exports, according to United Nations Comtrade data. However, the majority of that trade is tied to a single company, CSL Limited, which supplies substantial volumes of plasma and other blood products to the United States, a point highlighted by domestic media reporting in Australia.
The policy has intensified existing tensions over how to reconcile free-trade commitments with domestic manufacturing incentives. Prime Minister Albanese has previously described the PBS, Australia’s national pharmaceutical benefits scheme, as a core national asset and has insisted it remains off-limits in any trade discussions. In March, he described tariff threats as an act of economic self-harm and asserted that the PBS is non-negotiable, arguing that it reflects Australian values and public health commitments.
People briefed on the matter noted that the timing of the tariff announcement adds strain to the upcoming U.S.-Australia free-trade agreement discussions. Albanese has signaled that maintaining access to affordable medicines is essential for his government, while Washington-wielding negotiators have argued for greater flexibility to protect domestic industries. The administration did not provide a detailed path for enforcement or potential exemptions outside the stated construction condition, leaving Australian officials to assess potential impacts on producers, distributors and patients.
As the policy moves toward implementation, analysts expect the Trump administration to face questions from lawmakers in both parties about the feasibility of the manufacturing-build requirement and its ripple effects through allied trade. In Australia, business groups are likely to scrutinize exposure to U.S. markets, especially for pharmaceutical suppliers that do not have a direct U.S. plant footprint. Canberra officials have underscored the need to safeguard essential medicines and critical care products, while seeking to maintain a cooperative stance in the broader security and economic alliance with Washington.
The situation unfolds as U.S.-Australia relations navigate a complicated balance of competitive policies and longstanding alliance ties. White House officials emphasized that the new tariffs are part of a broader strategy to recalibrate the terms of trade and to secure supply chains in strategic sectors. Australian ministers have indicated willingness to engage seriously in negotiations, but stressed that core health programs and pricing mechanisms must remain protected. Further updates are expected as both governments assess the policy’s practical effects on industry, employment, patient access and the overall bilateral relationship.