‘Screw over': Truth about Donald Trump's plan to impose crippling 200 per cent tariffs on Australian pharmaceuticals
As the Albanese Government scrambles to secure more information about the US government's latest plans, Australian officials are sounding the alarm given that pharmaceutical exports are worth over $2 billion a year.
All plasma products collected in Australia stay here and are not exported to the US.
Instead, the export issue relates to vaccines and blood products collected overseas and sent to Australia for processing before being returned to the US.
President Donald Trump has threatened to introduce 200 per cent tariffs on pharmaceuticals – one of Australia's biggest exports to the US.
Speaking to the media before a cabinet meeting, the President suggested the 'very, very high' levies on pharmaceuticals would not go into effect immediately, saying he would give drug manufacturers 'about a year, year and a half' to respond and relocate their operations to the US.
'They're going to be tariffs at a very high rate, like 200 per cent,' Mr Trump told reporters.
'We'll give them a certain period of time to get their act together,' he added, seemingly referring to drug manufacturers bringing back manufacturing into the US.
Australia is subject to a 10 per cent 'baseline' tariff, which was the minimum rate imposed on all US trading partners by Mr Trump earlier this year.
Australia's plasma exports to the US
One of the biggest sections of the market includes blood products such as plasma products including exports linked to CSL Plasma which collects blood plasma in the United States.
In 2023, Australia exported $1.42 billion of vaccines, blood, antisera, toxins and cultures, making it the 20th largest exporter of 208 in the world.
Blood collection is a commercial operation in the United States, with plasma donors typically paid for their blood.
CSL Plasma operates one of the world's largest and most sophisticated plasma collection networks, with nearly 350 plasma collection centers in the US and elsewhere.
The blood products are mostly processed in the US but some are sent back to Australia to manufacture therapies for a variety of rare and life-threatening conditions.
These conditions include primary immunodeficiencies, bleeding disorders like hemophilia, neurological disorders, and critical care needs like those arising from trauma or burns.
One Australian official predicted that demand for the products would continue but the tariffs would 'screw over' patients relying on the notorious US healthcare system.
Vulnerable patients will be hit with cost increases because the tariffs are paid by importers, not Australian exporters.
CSL has a factory in Melbourne
Biotech giant CSL has a plasma fractionation facility in Broadmeadows in Melbourne.
The impact of the threatened tariffs relates to the commercial arm of CSL. which uses US blood products which are sourced in America and then processed in Australia before being sent back.
'Plasma manufacturing is a really fragile supply chain because it starts in a human vein,'' an industry source said.
'It's not a tap that you can turn on or off. You need people to vote with their feet to go into a facility that is enabled to collect plasma, and the demand for plasma products is growing globally each year.'
'Tariffs on pharmaceuticals impact the end user.'
Treasurer Jim Chalmers 'very concerned'
The Treasurer said on Wednesday that Washington's latest announcement was 'very concerning'.
'These are obviously very concerning developments,' Mr Chalmers told the ABC, adding that it had 'been a feature of recent months that we've had these sorts of announcements out of DC'.
'It's still early days. Obviously, we'll make a more detailed assessment of what's come out of the US in the usual way.'
'Our pharmaceuticals industry is much more exposed to the US market, and that's why we're seeking - urgently seeking - some more detail on what's been announced.
'But I want to make it really clear once again … our Pharmaceutical Benefit Scheme is not something that we're willing to trade away or do deals on – that won't change.'
'We've made it very clear that we think these tariffs are bad for the US, bad for Australia and bad for the global economy.' Mr Chalmers said one of the things the Albanese Government was 'most concerned' about was in addition to the direct impact on Australian workers and industries caused by this tariff, was the 'impact on global demand more broadly'.
'That's why we've been … at every opportunity, making the case that these tariffs are unjustified, they should be removed in line with our free trade agreement,' he said.
The Prime Minister has described the taxes on Australian exports to the US as an 'act of economic self-harm'.
'Tariffs are a penalty on the country that is imposing them, because what they require is for goods to be purchased with a tax on top, and the US has made that decision,' the Prime Minister said.
How plasma exports are used to help patients
CSL Behring uses a process called plasma fractionation to separate the collected plasma into different components, such as immunoglobulins, coagulation factors, and other proteins.
One example is helping people with bleeding disorders, with doctors utilising coagulation factors that are used to help patients with hemophilia and other bleeding disorders.
Plasma-derived products are also used in emergency situations like severe trauma, burns, and shock to replace lost blood volume and proteins.
For now, Australian officials concerned about the impact on blood product exports don't have full clarity on how it will impact the supply chain process.
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