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Yahoo
18 hours ago
- Business
- Yahoo
Can Eli Lilly Stock Withstand the Threat of President Trump's New Sweeping Tariffs?
Key Points President Trump has threatened to levy tariffs of up to 200% on pharmaceutical imports. Lilly's margins could be negatively affected if the company absorbs the higher costs. However, any effect on Lilly should only be temporary. 10 stocks we like better than Eli Lilly › The active ingredients of roughly 80% of prescription drugs sold in the U.S. are made in other countries. President Trump wants that to change. Instead of a carrot-and-stick approach, the president plans to rely solely on a stick -- tariffs. Trump recently threatened to levy steep tariffs on all pharmaceutical imports to the United States. As you might expect, the pharmaceutical industry doesn't like the idea. But can a top pharma stock such as Eli Lilly (NYSE: LLY) withstand the threat of Trump's new sweeping tariffs? About the president's threatened pharmaceutical tariffs First of all, firm details about Trump's pharmaceutical tariffs have not been released yet. However, the president said that tariffs on pharmaceutical imports will come "very soon." We do know, though, that Trump wants steep tariff levels. He said during a Cabinet meeting earlier this month, "They're going to be tariffs at [a] very high rate, like 200%." Commerce Secretary Howard Lutnick provided further clarification in an interview with CNBC. He said that the details on pharmaceutical tariffs will be announced at the end of July. Lutnick noted that a Section 232 investigation related to pharmaceuticals and semiconductors will be completed at the end of this month. Once that investigation is finished, Trump will establish his tariff policies. Section 232 investigations are intended to assess the effect of imports on national security. Trump doesn't plan for pharmaceutical tariffs to take effect immediately, though. He said, "We'll give them [drugmakers] a certain period of time to get their act together." He suggested that pharmaceutical companies would have "about a year, year and a half" to move manufacturing to the U.S. to avoid the tariffs. How Lilly could be affected Lilly CEO Dave Ricks addressed the issue of tariffs head-on in his company's first-quarter earnings call on May 1, 2025. Ricks stated, "We support the U.S. government's goals to increase domestic investment. However, we don't believe tariffs are the right mechanism." He suggested tax incentives as a better way to promote U.S. manufacturing of prescription drugs. But Ricks acknowledged the possibility that pharmaceutical tariffs could be imposed. He predicted that they "would have a negative effect on Lilly and for our industry." Wall Street agrees with that view. Analysts at Barclays wrote to investors, "A 200% tariff would inflate production costs, compress profit margins, and risk supply chain disruptions, leading to drug shortages and higher prices for U.S. consumers." UBS analysts agreed, stating that tariffs could significantly hurt drugmakers' margins on products manufactured outside the U.S. Lilly has three options in light of the steep pharmaceutical tariffs Trump has threatened. The option the president hopes drugmakers take is to relocate manufacturing to the Unites States. Lilly is already planning to build up its U.S. operations so that it can supply all products sold in the U.S. entirely from U.S. manufacturing facilities. However, it's doubtful that the company will complete this effort within the 12 to 18 months Trump mentioned. UBS said in a note to investors that four to five years is more reasonable for relocating manufacturing operations. The second option for Lilly is to pass higher prices along to customers. The Pharmaceutical Research and Manufacturers of America (PhRMA) estimates that a pharmaceutical import tariff of only 25% would increase prices by as much as 12.9%. Lilly's third option is to absorb the higher costs. Pharmaceutical tariffs of up to 200% could hurt the company's margins considerably. Evaluating the threat Let's return to our original question: Can Eli Lilly withstand the threat of Trump's new sweeping tariffs? I think the answer is "yes," albeit with a major caveat. The devil is in the details. Lilly's ability to navigate high tariffs depends on exactly what the Trump administration plans to do. Ricks said in Lilly's Q1 earnings call that tariffs would "have a transient effect for Lilly, but probably not a long-term one." I suspect he's right. The company already manufactures many of the products it sells in the U.S. inside the country. Those products wouldn't be affected. As Ricks mentioned, Lilly is already boosting U.S. production, which will also help. Finally, don't discount legal challenges to the president's tariffs. An argument could be made that pharmaceutical products made in Ireland, the primary overseas source for Lilly, don't present a national security threat to the U.S., since Ireland is a staunch ally. Granted, Lilly could face a bumpy ride for a while. But I don't think the threat of tariffs undermines the long-term investment thesis for this top pharma stock. Do the experts think Eli Lilly is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Eli Lilly make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,058% vs. just 179% for the S&P — that is beating the market by 878.83%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy. Can Eli Lilly Stock Withstand the Threat of President Trump's New Sweeping Tariffs? was originally published by The Motley Fool
Business Recorder
a day ago
- Business
- Business Recorder
Aurangzeb meets US Secy Commerce
ISLAMABAD: A delegation led by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb held a productive meeting with US Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer in Washington, D.C. Friday. Both sides expressed satisfaction with the progress in enhancing trade and economic ties, a cornerstone of Pakistan-U.S. bilateral relations. They reaffirmed their commitment to exploring opportunities to strengthen these ties in all possible areas of mutual benefit. Finance Minister Aurangzeb emphasized that the US remains Pakistan's largest trading partner and underscored Pakistan's interest in expanding cooperation in both traditional and non-traditional sectors, including IT & tech sector, minerals, and agriculture, to foster a mutually beneficial relationship. Both parties expressed optimism that ongoing trade talks would yield positive outcomes, benefiting the economies of both countries. Copyright Business Recorder, 2025
Express Tribune
a day ago
- Business
- Express Tribune
Pak expects breakthrough in US tariff talks
A delegation led by Finance Minister Muhammad Aurangzeb held a meeting with US Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer in Washington DC om Friday. Photo Express A delegation led by Finance Minister Muhammad Aurangzeb held a productive meeting with US Secretary of Commerce Howard Lutnick and United States Trade Representative Ambassador Jamieson Greer in Washington DC om Friday. Both sides expressed satisfaction with the progress in enhancing trade and economic ties, a cornerstone of Pakistan-US bilateral relations. They reaffirmed their commitment to exploring opportunities to strengthen these ties in all possible areas of mutual benefit. Aurangzeb emphasized that the US remains Pakistan's largest trading partner and underscored Pakistan's interest in expanding cooperation in both traditional and non-traditional sectors, including IT and tech sector, minerals, and agriculture, to foster a mutually beneficial relationship. Both parties expressed optimism that ongoing trade talks would yield positive outcomes, benefiting the economies of both countries.
Arab News
a day ago
- Business
- Arab News
Pakistan, US hold new round of trade talks amid tariff tensions, eye wider cooperation
KARACHI: Pakistan and the United States explored ways to broaden their trade partnership beyond textiles, a statement released in Islamabad said on Friday, as their officials held high-level talks in Washington to finalize a trade deal and address recently imposed US tariffs. The meeting between Pakistan's Finance Minister Muhammad Aurangzeb, US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer followed a virtual discussion between Aurangzeb and Lutnick last month, during which both sides agreed to push negotiations forward 'at the earliest.' The talks come after the US imposed a 29 percent 'reciprocal tariff' on Pakistani exports under President Donald Trump's trade measures announced in April, a move Islamabad said could undercut its fragile, export-led recovery. 'Finance Minister Aurangzeb emphasized that the US remains Pakistan's largest trading partner and underscored Pakistan's interest in expanding cooperation in both traditional and non-traditional sectors, including the IT & tech sector, minerals and agriculture, to foster a mutually beneficial relationship,' Pakistan's finance ministry said in a statement. It added officials from both countries were pleased with the progress made so far in deepening trade and economic relations, which they described as a key pillar of the broader Pakistan-US partnership. They reaffirmed their shared commitment to finding new ways to strengthen cooperation across all areas where both countries stand to benefit. Nearly 90 percent of Pakistan's exports to the US are textiles, a sector that is most vulnerable to the duties. The US is Pakistan's top export destination, with shipments totaling $5.44 billion in FY2024. From July 2024 to February 2025, exports rose 10 percent compared to the same period a year earlier. Pakistan is also seeking to diversify its trade destinations and export base to mitigate risks related to its international trade. 'Both parties expressed optimism that ongoing trade talks would yield positive outcomes, benefiting the economies of both countries,' the ministry said in its statement.
Yahoo
a day ago
- Business
- Yahoo
Pakistan says it held productive trade talks in Washington
By Asif Shahzad ISLAMABAD (Reuters) -Pakistan said it held productive trade talks with the U.S. in Washington on Friday to advance economic cooperation, according to a statement from the South Asian country's finance ministry. Finance Minister Muhammad Aurangzeb met U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Ambassador Jamieson Greer, the statement said. "Both sides expressed satisfaction with the progress in enhancing trade and economic ties, a cornerstone of Pakistan-U.S. bilateral relations," the statement added. It said Aurangzeb emphasized that the U.S. remained Pakistan's largest trading partner. Both sides expressed optimism that ongoing trade talks would yield positive outcomes, benefiting the economies of both countries, the finance ministry said. Pakistan was optimistic that the trade talks would conclude in a week's time after a virtual meeting between Aurangzeb and Lutnick late last month. The negotiations, focused on reciprocal tariffs, are part of a broader push to reset economic ties at a time of shifting geopolitical alignments and Pakistan's efforts to avoid steep U.S. duties on exports. Pakistan faces a 29% tariff on exports to the U.S. under President Donald Trump's measures to target countries with large trade surpluses with the U.S. Pakistan's surplus was around $3 billion in 2024. To offset the imbalance and ease tariff pressures, Islamabad has offered to import more U.S. goods, including crude oil, and to open up investment opportunities through concessions for U.S. firms in Pakistan's mining sector. U.S.-Pakistan relations saw a major boost when Trump hosted Pakistan's army chief Field Marshal Asim Munir at the White House last month in an unprecedented meeting. Solve the daily Crossword
