The tariff drama hasn’t died down as President Donald Trump has just announced plans for what he calls “a major tariff on pharmaceuticals.” Speaking at a National Republican Congressional Committee dinner, he declared, “We’re going to put tariff on our pharmaceuticals and once we do that, they’re going to come rushing back into our country because we’re the big market.”

Although the president offered few details about the specific increases, experts point to potential consequences for longstanding international arrangements, such as Australia’s Pharmaceutical Benefits Scheme, which places strict price limits on medicines. US companies like Pfizer and Johnson & Johnson have previously criticized this for undervaluing their research investments. Under Trump’s proposed tariff, Australia’s pharmaceutical exports—currently around $2 billion a year to the US—could face higher duties.

Adding to the tension, Jamieson Greer, a top trade official, recently insisted the US should be “running up the score” on trade surpluses with allies such as Australia. Sen. Mark Warner condemned this strategy as “insulting to the Australians” and harmful to American alliances.

Australian Prime Minister Anthony Albanese underscored the importance of fair trade, recalling that the US already maintains a surplus with Australia, and he criticized the notion of imposing tariffs as a pressure tactic.

Diplomatic strains are likely to intensify, with Albanese and opposition leader Peter Dutton vowing to defend the PBS as “sacrosanct” and “not up for negotiation.” Meanwhile, analysts at Monash University suggest that unless the tariffs are part of a wider deal, they may do little to influence Australia’s healthcare system.

Yet if such tariffs do take hold, the cost to Australian manufacturers—who might opt to relocate overseas—could be steep.

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