What’s the Impact of Trump’s Tariffs on Pharmaceuticals?
By Dale Gillham and Fil Tortevski
Just when it seemed Australia had dodged a bullet with only a 10 per cent tariff, Donald Trump has unleashed a shock 200 per cent tariff proposal on all imported pharmaceuticals.
With nearly $2.5 billion worth of Aussie medicines heading to the US each year, investors are rattled, and it raises far bigger questions: What could happen to Australian pharmaceutical companies and how will Trump’s tariff affect the price of drugs here?
Whilst a one-year transition period has been flagged, it’s done little to ease nerves. However, chaos often creates opportunity, and this could be your chance to turn Trump’s pharma tariff into an investing windfall.
Which stocks will benefit from Trump’s Tariffs?
CSL is front and centre in this story. With a market cap of $118 billion and nearly 350 plasma centres in the US, it’s a world-class business facing a short-term political headwind. About 40 per cent of its pharmaceutical revenue comes from the US. That said, around 85 per cent of CSL’s US business is entirely domestic, insulating it from the worst impacts.
Technically, $240 is a major support level and a break below this level could open the door to $180, but if it can hold at $240, a move up to $312 is highly likely.
Telix Pharmaceuticals (ASX: TLX) might be in an even stronger position. Its Gozellix imaging agent just secured US reimbursement approval, and after a healthy 30 per cent pullback, momentum and fundamentals are starting to align again. A retest of its $32 high is now back on the cards.
So, while Trump’s tariff threat may or may not sting at the pharmacy counter, it could be your ticket to profit in the markets. Keep CSL and Telix on your radar because when healthcare stocks move, they move fast.
What were the best and worst-performing sectors this week?
The best-performing sectors include Utilities, up over three per cent followed by Communication Services and Financials, both up over half a per cent. The worst performing sectors include Real Estate and Consumer Staples, both down over one and a half a per cent followed by Materials, down one per cent.
The best performing stocks in the ASX top 100 include Origin Energy, up over seven per cent followed by IGO Limited, up over six per cent and Orora Limited, up over five per cent. The worst-performing stocks include Northern Star Resources and A2 Milk, both down over nine per cent followed by Reece Limited, down over seven per cent.
What's next for the Australian stock market?
The All Ordinaries Index is teasing investors once again. This week, it came close to breaking its all-time high, only to slip back just under half a per cent as of Thursday’s close.
Right now, there’s a heavy cloud of uncertainty hanging over the market and it all comes back to the chaos of global trade. Tariffs are being thrown around like confetti as they are announced one day, delayed the next day and then changed the day after leaving investors without a clear path forward.
The materials sector took a beating this week, dragging the index lower, while staples and real estate stocks also struggled to find their feet. As if that wasn’t enough, the RBA decided to keep rates on hold, waiting for more inflation data before making any bold moves. With all the noise coming out of Trump’s tariff threats, the central bank is clearly choosing to keep its powder dry for now.
But here’s where it gets interesting. The market is in a holding pattern, consolidating just under its record highs. From experience, this kind of quiet sideways action is often the calm before the storm with the market resetting itself before its next big move.
Also, we’re still seeing plenty of dip buying, which shows there’s strong demand beneath the surface. But the million-dollar question is who’s buying? Is it the institutions getting positioned early for the breakout, or is it just retail traders chasing momentum at the top?
Historically, July is a powerful month for the All Ords. But so far, it’s been underwhelming. That could all change fast. A clean break above the all-time high at 8,882 could light a fire under the market, triggering a new wave of buying and sending prices soaring. On the flip side, if it falls below 8,600, we could see a sharper drop towards 8,300.
Right now, the market is coiled like a spring. Whether it explodes upwards or unravels down, one thing is clear, the next move is going to be big.
For now, good luck and good trading.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.
