The US will impose a 100 per cent tariff on Australian pharmaceuticals from October 1, in a move labelled "unfair and unjustified" by the federal government.
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President Donald Trump said on September 26 that he would only spare the tariffs if pharma production shifted to the US.
Federal Health Minister Mark Butler said the government was still "working through" the latest announcement for the $2 billion export industry.
"We've been engaging with them and making the case of why we should continue with the tariff-free trade that has characterised Australian relations for years," Mr Butler said.
He said the government would not negotiate on the Pharmaceutical Benefits Scheme (PBS), which regulates drug prices, in favour of better trade outcomes, despite the displeasure of US drug companies.
"The PBS has served Australians so incredibly well in terms of providing them with affordable access to medicines," he said.
Federal Opposition leader Sussan Ley said the decision by the Trump administration was "deeply concerning".
"It is moments like this when a strong direct relationship with the President of the United States is critical to help save Aussie jobs," she said.
"While other leaders are able to pick up the phone to the President, Anthony Albanese has not established such a relationship."
In a post to Truth Social, Mr Trump said he would be "imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company is BUILDING their Pharmaceutical Manufacturing Plant in America".
Australia is a major global exporter of vaccines and blood products. It also imports about $3.5 billion worth of US medicines annually under a free trade arrangement.
Australia's key pharma companies include CSL, which manufactures flu shots and other products in Europe, Australia and the US.
Other prominent Australian pharmaceutical companies include Mayne, Pharma Group Limited and Neuren Pharmaceuticals Limited.
A spokesperson for CSL said the company was "already expanding" its "significant United States manufacturing footprint".
"CSL will be actively monitoring further announcements from the administration in relation to the details of the tariffs," the spokesperson said.
"As per previous market guidance, we do not expect any material impact from these tariffs."
There are 36 pharmaceutical companies listed on the ASX.
The tariffs come after US drug companies singled out the PBS as "egregious and discriminatory" because its subsidised prices didn't reflect the cost of developing these drugs.
Mr Trump flagged the move at an address at the National Republican Congressional Committee on April 8.
"We are going to tariff our pharmaceuticals, and once we do that, they're going to come rushing back into our country because we're the big market," Mr Trump said.
The additional tariffs follow Mr Trump's April 3 levy of 10 per cent on Australian exports that had initially been exempted from gold and pharmaceuticals.
The federal government did not impose reciprocal tariffs following that announcement.
Mr Albanese's first in-person meeting with Mr Trump is scheduled for October 20 at the White House.
Peter Angelopoulos
Carla Mascarenhas
Carla Mascarenhas is the NSW correspondent covering breaking news, state politics and investigations. She is based in Sydney. Contact her on carla.mascarenhas@austcommunitymedia.com.au
