One essential item may get a 200 per cent tariff thanks to Trump

US president Donald Trump is up to his old tricks, threatening to inflict enormous tariffs as part of an ultimatum that could end up hitting Australians with a huge price hike on essential items.

There are warnings that Australians could face a huge rise in prices of medications after Trump suggested he may place a 200 per cent tariff on Australian exports unless Australia’s Pharmaceutical Benefits Scheme (PBS) is scrapped.

The major medicinal subsidy scheme was established in 1948. It limits how much American pharmaceutical companies can charge for drugs in Australia, they argue, and reduces the prices Australian chemists have to pay to wholesalers for medicines for conditions such as multiple sclerosis, asthma and cancer. And, the American drug companies aren’t happy about it.

After being lobbied by such companies, Trump has hit Australia with an ultimatum – move their drug production to the United States or be hit with 200 per cent tariffs on their pharmaceutical exports.

After meat and gold, pharmaceuticals were Australia’s third-largest export last year. They sold $2.1 billion worth of medicines to the US market.

“We’re going to give [drug manufacturers] about a year, a year and a half to come in, and after that, they’re going to be tariffed,” Trump said

“They’re going to be tariffed at a very, very high rate, like 200 per cent. We’ll give them a certain period of time to get their act together.”

  Donald TrumpGetty Images

However, scrapping the PBS seems highly unlikely, particularly after the country’s current Labour government was re-elected with a pledge to drop the price of PBS medicines to no more than $25 a script, down from the $31.60 cap.

Australian opposition politician Kevin Hogan told the Daily Mail Australia that it is, “National interest and sovereignty first”.

“We did the free trade agreement with the US when we were in government way back. We had the Pharmaceutical Benefits Scheme protected within that free trade agreement.”

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