Winners & Losers of Trump's Pharma & Chip Tariffs

Trump is threatening to impose triple-digit tariffs on imported pharmaceuticals and semiconductors, as markets are just getting a handle on global, across-the-board tariffs.

Key Events Moving Markets

• The Trump Administration threatens to apply tariffs of up to 250% on pharmaceuticals and 100% on chips.
• The White House is pressuring companies selling medicines in the US to lower prices.
• US semiconductor companies rise while Europe-based pharmaceutical stocks slump.
• Roche is among the companies most at risk as Swiss firms face tariffs of up to 39%.

Cut Prices by Raising Taxes?

Last week, US President Donald Trump made bold claims about wanting to , in what analysts are saying is a show of strong political will to cut costs. Earlier in the month, he sent letters to 17 of the major drug manufacturers in the US demanding that they offer the same prices domestically as they do in Europe and other developed nations. Americans pay almost three times as much for medications as do their peers. One of the mechanisms he is considering is imposing at first "small tariffs" that could be ramped up to as high as 250%. Trump says he wants to incentivise the manufacturing of pharmaceuticals to return to the US, as production has shrunk dramatically over the last couple of decades. The tariffs would be the result of a Section 232 investigation started in April and would be concluded soon, which would also guide tariffs on semiconductors.

In parallel, Trump said he would disclose new tariffs this week . US indices rose in the aftermath of the announcement, as he hinted at significant carve-outs that would benefit local producers. That includes exemptions for companies making commitments to manufacture in the US, allowing Apple to largely avoid the costly tariffs. Apple shares led gainers last week following the news, with other companies such as Nvidia, AMS and Micron also edging higher in the aftermath. However, Nvidia and AMD will have to in China to the US government.

Big Movers on the News

EU-based drug manufacturers saw in the aftermath of the tariff announcement. The companies were already facing a 15% levy as part of the EU-US trade deal agreed a couple of weeks earlier. Bayer was among the worst performers, as the news on tariffs came after the company reported a 5% drop in pre-tax profit during the first half of the year. British firms also underperformed, but AstraZeneca is looking to minimise the impact of the US policy by investing $50 billion into new manufacturing facilities in the US. This would enable the domestic production of all its products for the American market. Meanwhile, GSK affirmed its guidance for the year, implying that the tariffs won't affect the company's bottom line. The UK did manage to obtain the lowest tariff rate of 10% after all.

to respond to the 39% tariff that the Trump administration slapped on the country. The move was a surprise to even the Swiss government, which expected to reach a deal similar to the UK. Roche had previously committed to $50 billion in investments in the US over the next five years. TD Cowen noted that from the pharma tariffs.

Stoxx 50 Struggles to Recover From Tariffs

The Euro Stoxx 50 premier index of European firms dropped after the tariffs were announced at the start of the month. Its recovery faces a crucial test as RSI pops above 50, and it closed almost in the middle of the Bollinger Bands. If the index continues to recover, it could face resistance at the pre-tariff level of 5,400, which has now turned into resistance. A break higher could find resistance at the 5,470 level. On the flip side, if the index turns downward, it could form a third falling peak, suggesting a potential downward continuation. Support could be found at the LBB, which coincides with the June low at 5,250, followed by the nearest swing low at 5,150.

Source: SpreadEx | Eurostocks 50, Daily