Donald Trump announces new tariffs on drugs, trucks and kitchen cabinets | BBC News

A new wave of tariffs has been announced, including a 100% levy on branded drug imports unless pharmaceutical companies establish new US manufacturing plants. Additional tariffs are planned for heavy goods vehicles (25%) and kitchen/bathroom cabinets (50%). These measures aim to address concerns that the US disproportionately subsidizes global healthcare costs and to curb price gouging.

The announcement has already impacted Asian pharmaceutical stocks, with some companies experiencing significant share price drops. The uncertainty surrounding these tariffs is seen as the primary concern for markets, potentially leading to prolonged instability. This strategy is viewed by some as a negotiation tactic rather than a final decision.

Separately, a potential deal for an American division of TikTok under US ownership has been proposed, with claims of approval from China's president. This follows a US law mandating the sale of TikTok's US operations unless its Chinese owner divests. While this plan is presented as a way to secure user data and prevent its use as a propaganda tool, the valuation and lack of explicit confirmation from China suggest ongoing complexities.

• A 100% tariff on branded drug imports is threatened, contingent on companies establishing US manufacturing.
• Other tariffs include 25% on heavy goods vehicles and 50% on kitchen and bathroom cabinets.
• The stated rationale for pharmaceutical tariffs is to stop the US from subsidizing foreign healthcare and to combat price gouging.
• Asian pharmaceutical stocks have fallen due to the tariff threats, with uncertainty being a major market concern.
• A proposed deal for an American TikTok division under US ownership faces scrutiny regarding its valuation and the lack of official confirmation from China.

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New Wave of Tariffs Announced [00:01]

• A 100% levy has been announced on branded drug imports into the United States.
• This tariff will only be imposed on pharmaceutical companies that do not intend to open new manufacturing plants in the United States.
• A 25% tariff is planned for all imports of heavy goods vehicles.
• A 50% levy is to be imposed on kitchen and bathroom cabinets.
• The rationale behind these tariffs is that the US has been subsidizing the healthcare of foreign countries by paying significantly more for the same drugs.
• There is a stated aim to stop profiteering and price gouging from "big pharma."

The speaker highlights a new wave of tariffs, including a significant 100% levy on branded drug imports unless companies commit to building manufacturing facilities in the US. Additional tariffs are set for heavy goods vehicles at 25% and kitchen/bathroom cabinets at 50%. The underlying justification is to end US subsidies for foreign healthcare and to combat unfair pricing practices by pharmaceutical companies.

But starting today, the United States will no longer subsidize the health care of foreign countries, which is what we were doing. were subsidizing others healthcare. Countries where they paid a small fraction of what for the same drug that what we pay many many times more for and will no longer tolerate profitering and price gouging from big pharma.

Pharmaceutical Industry Reaction and Global Impact [00:32]

• The European pharmaceutical industry representative body stated that tariffs on medicines would create the "worst of all worlds."
• More reaction is anticipated.
• The core concern is the US paying the "lion share" of the world's pharmaceutical bills.
• The European Union is specifically criticized as being "brutal."
• Shares in pharmaceutical companies across Asia have been falling following the threat of 100% tariffs on branded drugs, effective October 1, unless producers have already begun US manufacturing.
• Companies with significant exposure to the US market that lack existing US manufacturing investments are expected to be heavily impacted.
• A major Japanese pharmaceutical company saw its shares tumble by 4.3%.
• An Australian company also plummeted to a six-year low.
• Uncertainty stemming from such announcements is identified as the primary problem, potentially weighing on share prices and causing damage.

The announcement of tariffs has already elicited strong negative reactions from the European pharmaceutical industry, with fears of dire consequences. Markets, particularly in Asia, have responded negatively, with pharmaceutical stocks declining due to the potential impact on companies without US-based manufacturing. The prevailing issue is the uncertainty these tariffs create, which can significantly affect market stability.

But President Trump made clear that his concerns were based on the US, as he put it, paying for the lion share of the world's pharmaceutical bills.

Other Tariffs and Manufacturing Trends [03:10]

• Other announced tariffs include 50% on kitchen cabinets, 30% on upholstered furniture, and 25% on heavy goods vehicles.
• The rationale for targeting these sectors relates to returning jobs to the US, which are perceived to have been taken away by other countries and supply chains.
• China has long been a global manufacturing hub for furniture, known for its quality and scale.
• When companies attempted to move production away from China due to previous tariffs, they often struggled to maintain quality and scale in alternative locations like Vietnam and Malaysia.
• A significant portion of furniture manufacturing has consequently remained in China.
• India and China are major producers of generic drugs, but this announcement appears not to target generic drugs specifically.
• Smaller companies or those not manufacturing in the US are highlighted as potential problem areas.
• Trucks, used globally, have significant manufacturing from Asia, especially Japan.
• Questions are raised about how these new tariffs will impact existing trade agreements, particularly for countries like Japan that have already negotiated trade deals.

The discussion expands to other targeted sectors like furniture and vehicles, linking these tariffs to a broader strategy of bringing manufacturing and jobs back to the US. The persistent strength of manufacturing hubs like China in sectors such as furniture, and the challenges of shifting production, are noted. The potential impact on existing trade agreements, especially for countries like Japan, is also a point of concern.

And he said um you know these companies, these countries, these regions, these supply chains have taken jobs away from the US and he wants to return them to the US.

TikTok Deal and Data Security Concerns [05:01]

• A deal has been telegraphed for an American division of TikTok, to be under US ownership.
• This plan reportedly has the "blessing" of China's president, though there has been no official comment from Beijing or TikTok's owner, ByteDance.
• A recent US law mandates that TikTok will be banned unless ByteDance sells it.
• The execution of this law has been delayed pending a sale agreement.
• The plan is described as a way to keep TikTok operating while protecting Americans' data privacy, as required by law, and preventing its use as a propaganda weapon.
• The proposed price for this deal is around $14 billion, which is considered low given TikTok's US revenue of $10 billion, especially if it were valued as a typical tech company (potentially over $40 billion).
• This low valuation might explain the lack of enthusiasm from the Chinese side.
• The White House possesses leverage, as the previous administration briefly suspended TikTok's service in the US.
• The finalization of the deal is uncertain, with potential for further stages.
• A key question remains the approval of the export of TikTok's algorithm.

The conversation shifts to a proposed deal for an Americanized TikTok, which is presented as a move to safeguard user data and national security. Despite claims of Chinese approval, the valuation of the deal and the silence from Chinese authorities suggest complications. The outcome remains uncertain, with questions about the algorithm's transfer and the overall finalization of the agreement.

We wanted to keep Tik Tok operating, but we also wanted to make sure that we protected Americans data privacy as required by law, both because it's the right thing to do, but also because it's a legal requirement of the law that was passed last year by Congress.

Market Reaction to Trade Announcements [08:10]

• The recognition of tariff discussions is generally not good for markets.
• Analysts expect markets to be disappointed by new tariff announcements.
• However, given the history of such announcements often leading to deals, the market reaction might be limited.
• The specific details of who is hit by the tariffs and on which side remain key questions.
• The "devil remains in the detail," and these specifics take time to emerge.
• The Chinese government has issued a statement urging the US to exercise "open and fair treatment" regarding the TikTok arrangement, indicating it is not a mutually agreed-upon deal.

Market analysts anticipate a negative reaction to new tariff announcements, though the historical pattern of these announcements often preceding negotiated deals might temper the immediate impact. The precise details of who will be affected by the tariffs are crucial but are expected to emerge gradually. The Chinese government's response to the TikTok proposal suggests a lack of mutual agreement.

Well, certainly the recognition of of tariff discussions isn't great for markets. I think they'll be disappointed.