Australia’s pharmaceutical giant CSL has become the latest casualty in President Donald Trump’s escalating trade war, with shares diving as much as 5% after the US leader threatened devastating tariffs on imported medicines.
The biotechnology behemoth, valued at $115 billion, saw its stock price crash to five-year lows following Trump’s announcement of potential 200% tariffs on pharmaceutical imports. CSL shares closed down 2.8% at $243.50 on heavy trading volumes.
Trump Takes Aim at Big Pharma
Speaking at a Republican Congressional Committee dinner, Trump declared war on pharmaceutical imports with characteristic bluntness. “We are going to tariff our pharmaceuticals and once we do that they’re going to come rushing back into our country,” he told the crowd.
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America…” – President Donald J. Trump pic.twitter.com/z5EXQhw1xK
— The White House (@WhiteHouse) September 25, 2025
The threat marks a dramatic shift from Trump’s original “Liberation Day” tariff plans, which initially exempted pharmaceuticals. Now, the sector finds itself squarely in the crosshairs of America’s most aggressive trade policy in decades.
Trump’s justification centres on his belief that the US subsidises global healthcare. “We develop the drugs, we save lives, and then other countries buy them for a fraction of the cost,” he argued, specifically targeting Australia’s Pharmaceutical Benefits Scheme.
CSL’s Massive US Exposure Spells Trouble
The timing couldn’t be worse for CSL, which generates approximately 50% of its $25 billion annual revenue from the United States. The company’s heavy reliance on Swiss manufacturing facilities makes it particularly vulnerable, as products exported from Switzerland face the full brunt of any pharmaceutical tariffs.
CSL’s plasma-derived therapies and influenza vaccines serve critical medical needs, but Trump’s tariff regime doesn’t discriminate. The company processes plasma collected in the US at facilities in Australia and Switzerland before shipping finished products back to American patients.
Goldman Sachs analysis suggests a 10-25% tariff could slash CSL’s earnings by 6-20%. With Trump threatening tariffs as high as 200%, the potential impact becomes astronomical.
Manufacturing Dilemma Creates Strategic Headache
CSL operates a facility in Kankakee, Illinois, but it’s insufficient to serve the entire US market. The company faces a stark choice: absorb crushing tariff costs or invest billions in expanding American manufacturing capacity.
Moving production stateside would require approximately $2 billion in capital expenditure, according to Morningstar estimates. While this represents just 2% of the company’s fair value, it highlights the massive disruption Trump’s policies could unleash.
“CSL could supply up to 80% of its US sales from its Australian plant,” notes investment firm Argonaut. However, this flexibility may prove meaningless if tariffs apply universally to pharmaceutical imports.
Market Sentiment Sours Despite Defensive Qualities
The broader Australian healthcare sector has suffered collateral damage, with the S&P/ASX 200 Health Care index falling 0.92% over five trading days. CSL shares are now down 12% year-to-date and trading 25% below August 2024 highs.
CSL Share Price
Despite the volatility, some analysts see opportunity in the chaos. “CSL at 21 times earnings for a stock that’s probably going to deliver low double-digit earnings growth is as cheap as I have seen it,” says investment expert Johnston.
Morgans analyst Jellinek maintains a buy rating with a $303.70 price target, representing 35% upside from current levels. “The impact of US tariffs is factored into the share price, so there’s upside potential if they are withdrawn or lower than anticipated,” he argues.
Strategic Response: Demerger Plans Accelerate
CSL announced plans to spin off its vaccine division, Seqirus, before the end of financial year 2026. The move aims to create two focused entities better positioned to navigate the challenging regulatory environment.
The vaccine business faces additional headwinds from Robert F. Kennedy Jr.’s appointment as US Health Secretary. Kennedy’s vaccine scepticism has already contributed to declining immunisation rates, with Seqirus revenue falling 9% in the first half of 2025.
Global Supply Chain at Risk
Trump’s pharmaceutical tariffs threaten to disrupt critical medicine supplies worldwide. Plasma-derived therapies cannot be quickly scaled elsewhere due to long production cycles and regulatory hurdles.
US patients may face higher costs or potential shortages, while Australian firms grapple with retaliatory measures and strained diplomatic relations. The policy could force a fundamental restructuring of the global pharmaceutical supply chain.
Final Thoughts
The unfolding trade war represents more than mere policy posturing – it threatens to reshape the global pharmaceutical landscape permanently. For CSL investors, the coming months will test whether Australia’s biotech champion can navigate the most challenging regulatory environment in its 109-year history.
FAQs
Q: How much of CSL’s revenue comes from the US?
A: Approximately 50% of CSL’s $25 billion annual revenue is generated from the United States market.
Q: What tariff rates is Trump considering?
A: Trump has threatened tariffs as high as 200% on pharmaceutical imports, though rates of 10-25% are more commonly discussed by analysts.
Q: Can CSL avoid tariffs by manufacturing in the US?
A: CSL has limited US manufacturing capacity currently. Expanding domestic production would require approximately $2 billion in investment.
Q: When might these tariffs take effect?
A: Policy analysts suggest potential implementation in Q3 or Q4 2025, though Trump has indicated companies may get 12-18 months notice.
