Topic of the week: Trump Announces Potential Tariffs on Pharmaceuticals
President Donald Trump announced plans to impose "major" tariffs on pharmaceuticals, which are expected to be announced "very shortly". Trump stated that the tariffs would be a major move to encourage pharmaceutical companies to move their manufacturing operations from countries like China to the United States.
The move would join other sector-specific tariffs imposed by the Trump administration, including those on cars and auto parts, steel, and aluminum. However, the reality of implementing such tariffs is complex, as pharmaceutical companies source materials from around the world and any changes in manufacturing would require significant time and regulatory oversight.
Pharmaceutical companies have warned that the tariffs could reduce research spending and lead to layoffs. Generic companies, which often source ingredients from China and India, may see the prices of critical medicines like antibiotics increase. Trump's announcement has sparked concerns about the potential impact on the pharmaceutical sector, with companies with significant exposure to China being particularly affected.
Trump's reliance on presidential powers to declare tariffs in emergency situations and address national security threats has been criticized by opponents, who argue that the actions amount to an illegal power grab. The announcement comes as the Trump administration has hiked tariffs on China to 125% while pausing many other country-specific tariffs for 90 days in favor of a universal baseline 10% rate for more countries.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 0.35% from $2,238/FEU to $2,246/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have risen over the last two weeks, increasing by 5.9% to $3,541/FEU.
- Global container spot prices have fallen over the last two weeks, and are now sitting at $2,031/FEU, a 16.1% decrease over the last two weeks and a 18.7% decrease from spot rates this time in 2024 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.39, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $2.24 (100-3000kg), says FAX, decreasing by 9.3%
- Europe to Asia, Greater China spot rates currently sit at $1.18 (100-3000kg), says FAX, decreasing by 1.6%
That’s all for this week’s update…
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