Treasurer Warns of 'Very Concerning' US Tariff Threats as Trump Eyes 200% Pharmaceutical Levy
Treasurer Jim Chalmers has described overnight US tariff announcements as "very concerning developments" after President Donald Trump flagged potential 200 percent tariffs on pharmaceutical imports and confirmed 50 percent levies on copper.
Speaking on ABC Radio National Breakfast Wednesday morning, Chalmers said the government was "urgently seeking" details on the pharmaceutical tariff threat, which could impact billions of dollars in Australian exports to the United States.
"We are talking about billions of dollars of exports to the US when it comes to pharmaceuticals," Chalmers told host Steve Cannane. "Our pharmaceutical industry is much more exposed to the US market."
The Treasurer emphasized that Australia's Pharmaceutical Benefits Scheme would not be compromised in any potential negotiations with the Trump administration.
"Our Pharmaceutical Benefits Scheme is not something that we're willing to trade away or do deals on," Chalmers said. "That won't change."
Trade Tensions Escalate
The tariff announcements come amid escalating global trade tensions, with South Korea receiving a 25 percent tariff despite having a free trade agreement with the United States that Trump renegotiated in 2018.
Chalmers said the copper tariff would have minimal direct impact on Australia, with the US accounting for less than 1 percent of Australian copper exports. However, he warned the broader trade tensions posed risks to global economic growth.
"These escalating trade tensions around the world in recent months are a substantial concern to us," Chalmers said. "When we work through the possible consequences of what we're seeing here, that does pose a risk to global growth."
The Treasurer confirmed that US trade barriers, including beef and pork restrictions and concerns about Australia's news media bargaining code, had been raised in recent discussions between the countries.
"When it comes to the digital economy, the news media bargaining code was implemented by our predecessors," Chalmers said. "It's not about raising revenue for the government; it's about making sure that there's a level playing field in our media."
RBA Decision Disappoints Markets
Chalmers also addressed the Reserve Bank's decision Tuesday to hold the cash rate at 3.85 percent, acknowledging market surprise at the outcome.
"I think it's certainly the case that the market was surprised. I think certainly economists were surprised by the outcome," Chalmers said. "There were millions of people who were hoping for more rate relief yesterday and didn't get it."
The RBA board's decision was not unanimous, with uncertainty in the global economy cited as a key factor. Chalmers defended the government's economic management, saying inflation had fallen from "something which had a 6 in front of it" to the low 2s.
"We've made a lot of progress together as Australians on inflation," Chalmers said. "We've been a helpful part in the fight against inflation."
The Treasurer highlighted new cost-of-living measures that took effect July 1 and credited the government's approach with enabling two interest rate cuts in the past five months.
Productivity Challenges Persist
On productivity concerns raised by the RBA, Chalmers acknowledged it remained "one of the big structural challenges in our economy" but said it had been a feature "for the last couple of decades."
"We did spend a big chunk of the first term working to make our economy more productive," he said, citing competition policy, skills investment and technology adoption as key areas.
An August productivity roundtable will examine next steps for addressing the challenge, which Chalmers said did not produce "quick wins or immediate kind of spikes in the data."
The Treasurer emphasized Australia's success in reducing inflation without the unemployment spikes seen in other countries.
"We haven't paid for our progress on inflation with much higher unemployment," Chalmers said. "That's a good thing."
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China Relations and Port of Darwin
Discussing Prime Minister Anthony Albanese's upcoming visit to China, Chalmers described it as "a really important opportunity" while acknowledging complexities in the bilateral relationship.
The Chinese government is expected to raise Australia's decision to return the Port of Darwin to Australian hands, a move Chalmers defended as correcting a previous Liberal government error.
"We've been clear that we think the Port of Darwin should never have been sold off under the previous Liberal government in the first place," Chalmers said. "We've made it very clear that we will see the Port of Darwin return to Australian hands."
He said the government would work through the port issue "methodically and in a considered way" while maintaining that the China-Australia economic relationship "benefits both sides."
US Trade Pressure Points
The interview revealed specific US complaints about Australian trade practices, with US Trade Representative Jamieson Greer recently telling a Senate hearing that Australia bans US beef and pork and was preparing measures against US digital companies.
Chalmers confirmed these issues had been raised in discussions but defended Australia's positions on scientific grounds for agricultural restrictions and fairness principles for digital platform regulation.
"When it comes to beef, there are some scientific processes underway, agricultural processes underway, to try and work through some of those issues," he said.
On the news media bargaining code, which appears in US trade reports as a barrier, Chalmers said Australia had provided assurances about its purpose.
"What we're talking about here is just making sure that news media organisations are paid for the media that they generate," he said.
Global Economic Implications
The Treasurer warned that the unpredictable nature of recent tariff announcements was injecting "volatility and uncertainty" into the global economy, potentially undermining post-COVID economic recovery progress.
"These tariffs are bad for Australia, they're bad for the US, they're bad for the global economy," Chalmers said.
The developments come as Australia seeks to maintain economic relationships with both its largest trading partner, China, and its key security ally, the United States, amid rising global trade tensions.
The pharmaceutical industry represents one of Australia's most significant export sectors to the US, making the potential 200 percent tariff particularly concerning for the government as it balances competing international pressures while protecting domestic policy priorities.
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