Tariffs ‘hard to come back from’, says US pharma boss
“Due to their complex supply chains and the often life-saving products they make, pharmaceutical companies along with microchip makers were temporarily exempted from the tariffs imposed on all products imported into the US.
But Mr Ricks seemed in little doubt that tariffs will eventually hit and that this will have damaging consequences for investment in new medicines.
He explained drug prices were essentially capped in Europe and the US, which meant the impact of tariffs would be felt elsewhere.
“We can’t breach those agreements so we have to eat the cost of the tariffs and make trade offs within our own companies,” he said.
“Typically that will be in reduction of staff or research and development (R&D) and I predict R&D will come first. That’s a disappointing outcome.””
The tariffs will hit US drug companies that import from India - therefore what we buy from CVS etc. will become more expensive. But I am not sure this will affect what we do here. When we go to Indiamart and order from Jagdish or whoever, is he really going to add the tariff, or is he just going to charge us the “India price plus shipping” and send it to us? It may get stopped at customs but that’s already true.
They are going to stop ‘de minimis’ packages and charge an extra $25 USD per package coming into the USA. Still a bargain, but I’m concerned there will be more seizures going forward.
From the Rolling Stone 4/4
Apparently, there is a group of his followers who are grateful Trump is playing Robinood, and they believe he’s trying to hurt the rich to help the poor… I can’t even feel pity for these naive fools at this point… I normally have a lot of empathy for them. And many of them won’t really know much about Warren Buffet, so they would believe this, too.
Make sure you are sitting down
……
On Friday morning, the president shared a link on Truth Social to what appears to be a video claiming that he was “Purposely CRASHING The Market.”
The one-minute video – originally shared March 15 on TikTok – predates the president’s tariff announcement on Wednesday. It claims that “Trump is crashing the stock market by 20 percent this month, but he’s doing it on purpose. […] Here’s the secret game he’s playing, and it could make you rich.”
The video proposes that Trump is attempting to “push cash into treasuries, which forces the Fed to slash interest rates in May, and those lower rates give the Fed the ability to refinance trillions of debt very inexpensively. It also weakens the dollar and drops mortgage rates. Now it’s a wild chess move, but it’s working.”
“What about his tariffs? I’ll tell you, it’s a genius play,” the video adds. “It actually forces companies to build here to dodge them. It also forces farmers to sell more of their products here in the U.S., to bring grocery prices way down. We’ve already seen this with eggs. Now, remember, 94 percent of all stocks are owned only by 8 percent of Americans. So Trump, he’s taking from the rich short term and handing it to the middle class through lower prices.”
Sound dodgy and completely made up? Don’t stress, the video makes sure to point out that super rich guy Warren Buffett “just said [that] Trump is making the best economic moves he’s seen in over 50 years.” Only Warren Buffett never said that. He actually called Trump’s proposed tariff regime an “act of war.”
Again the formal process is that the receiver pays the tariff, not the vendor. On all levels, commercial or individually.
With DDP shipping, the vendor collects the tariff and remits back to the US gov but very few small vendors would add the bureaucratic cost of managing that. That is called DDP (delivered duty paid) note “duty” not tariff.
You often see DDP when you purchase something from Amazon that is not stocked locally but comes from offshore. Amazon collects the duty/tariff from the consumer and remits it to the Gov. Amazon are big enough to have systems in place to automate that. Most small business will pass that overhead burden down the line to the consumer.
The other method is DDU (delivered duty unpaid) this is the typical method for small business in the DTC (direct to consumer) business model.
Example: you order a $100 item from small vendor XYZ who only offers DDU shipping. The parcel arrives and you will receive a notice from the shipping company that you owe $25 on your $100 purchase. You pay the $25 and they deliver the parcel. The shipping company then handles the remittance to the gov. This reduces the bureaucratic burden on the small business.
Note that in all those “formal” processes, the end user pays duty, taxes and any tariff. NOT the vendor.
Basically tariffs are taxation without representation. The one getting taxed is the consumer, on all levels.
Tariffs also create a false economy. But that is another topic
I don’t understand the idea of “without representation” the people paying the tax are USA citizens some of whom who will have voted in the presidential election. Hence the decision that they should pay the tax has representation.
It is being “sold” to the American people that way but cracks in that are beginning to appear and will grow much larger.
To enact a “tax” in the US it goes through elected officials, both federal and state, taxation with representation. Tariffs are not a tax.
The US was founded partially on this principle, thus the Boston Tea Party… leading to the Revolutionary war in rebellion to the KING’s arbitrary tax (no representation) to enable fair taxation of the people by the people, etc… the definition of taxation by duly elected officials.
With tariff’s (not a tax) they can be enacted by decree of one person. While that one person was elected and can do many things by decree, that is not how regular tax laws are implemented in the US.
I accept there is an argument that the tariffs are not constitutional. However, they are being implemented by someone people voted for. Whether the courts will override it or not we don’t know. I think the non MAGA republicans are waiting for a public demand to control Trump ATM.
I think you guys are probably panicking over nothing. Customs already uses non-intrusive inspection technology on every single package coming through and they’ve been doing this for many years. They know every single time that when they see package of pills from India that it’s prescription meds. Marking them as “health supplements” isn’t fooling anybody and never has.
The bottleneck for them is the number of FDA inspectors. Even when they kick suspicious packages over to the FDA inspection room those guys have to manually open the package and decide if it’s worth their time to count everything, find it in their computer, log it, and manually type your address into a computer to generate a love letter. They cannot legally stop your import without a reason, which is why they have to cite the specific law that is being broken for each different drug.
They only have time to do all this for a fraction of the packages that the customs guys send over to them. The vast majority get passed right through both sets of screeners without being opened, with full knowledge of the type of contents, because the volume is too high and it always will be too high.
Without de minimis there will be a tax on our already cheap drugs. It’s not the end of the world.
One aspect of this that most will not get, yet… When you travel abroad (plane, train, or automobile) and return home with your haul of $800 worth of “duty free” items for every individual, you are using the $800 de minimis exemption.
If de minimis goes away it will have a broader effect than the average consumer is aware of.
We have a similar law, a $200 exemption for a 24 hr stay and a $800 exemption for a 48hr stay. I have found that coming back by car they don’t do much under $200 for a day trip. We often go across on antique hunts for MCM finds in Michigan.
Well, there’s the law (or regulation), and then there’s the enforcement or execution. I wonder, first, how fast these duties and tariffs will be implemented to encompass 100% of products and packages coming in, starting Wednesday or whatever hour it goes into effect. Do they need time to ramp up enforcement and personnel level and procedures to get to every single package, will this slow transit through customs or is everything so automated that it’s just flipping a switch, some entry on the computer.
And longer term, will this be 100% efficient, or hit and miss. I guess we’ll find out.
I have a couple of packages still preparing for shipment in India, so I’ll find out soon enough. If it’s 25% duty, then whatever is declared on the package customs form, I don’t know what, but I paid about $500 for each. If I were to go by that, I’ll have to pay $125 or so for each. We’ll see.
It will be different for consumers vs commercial. Commercial is “easy” where taxes, duty’s and tariffs are already done through brokers. Minimal additional work required. It can be turned on and off like a light switch, other than timing related to shipments in process.
For consumers, if it’s flat rate and does not require inspection, only declaration by the shipper, that system is already in place as well. It will be handled/collected by the carrier, FedEx, DHL, etc already do this.
The only real hold up would be if they decide to increase parcel inspection and @AgentSmith has provided a good explanation of how that works. If inspection requirements are not increased and the tariff’s are flat rate, it should not be a significant increase in bureaucracy.
I have several friends who work for Canada Customs and one did a stint in the “mail” room. They used to pile mail bags and walk the dog around the pile, no dog notice, the pile moved on… LoL!
It’s supposed to be electronic declarations in advance, with more detailed codes that were worked out many months ago when Biden was in office, by the way. (De minimis has been on the chopping block for a very long time with bills and rules drafted long ago.) They are concerned with China trying to skirt the law by mis-declaring things so there will be random inspections (as always), with huge fines imposed for deception.
But as I said, the issue is the FDA inspection bottleneck, which is completely independent of tariffs. Unless RFK Jr. decides to reallocate the FDA’s budget to hiring more inspectors at JFK, seizures should not increase. We haven’t yet seen any evidence that he’s focused on stopping Indian imports, so I don’t think there’s cause for alarm unless that changes.
