Latest news with #Section232
Yahoo
7 hours ago
- Business
- Yahoo
Wall Street waves off Trump's 200% pharma tariff threat
Large pharmaceutical stocks and funds are trading flat or up slightly Wednesday, sending a clear signal after President Trump's threat Tuesday to leverage as much as 200% tariffs on pharma. "We'll be announcing something very soon on pharmaceuticals. We're going to give people about a year, a year and a half to come in ,and after that they're going to be tariffed ... at a very, very high rate, like 200%," Trump said at a Cabinet meeting Tuesday. Mizuho Securities health sector expert Jared Holz noted the market initially reacted before right-sizing Tuesday. "The space sold off on the headlines yesterday but finished flat/up on the whole, evidence of the buy- side shaking off noise," he wrote in a note to clients Wednesday. The S&P's Biotech ETF (XBI) and Health Care Select Sector Fund (XLV) both remained flat in trading Tuesday afternoon through Wednesday morning, indicating the indifference Wall Street has adopted to Trump's tariff threats — with some analysts expecting the Street-coined term TACO, or Trump Always Chickens Out, to be applied in the case of pharma as well. "200% Drug Tariffs, or 'TACO' Eventually?" Jefferies analyst Cui Cui headlined in a note Wednesday, adding, "[We] expect considerable industry resistance to drug tariffs." Jefferies health sector analyst Akash Tewari similarly mocked the tariff in his note to clients, headlined "Tariffs schmariffs — why the Trump pharma announcement is noise." Tewari explained that with the grace period of 1 to 1.5 years, the impact of tariffs "could be more modest" than previous estimates, allowing more time for companies to mitigate any potential impact. Companies also indicated in first quarter discussions with analysts that they expect a different approach rather than a blanket tariff. "Several [companies] mentioning stockpiling inventory ahead of tariffs to mitigate near-term impact & ability to ramp up US capacity [plus] many hinted there could be a distinction between Section 232 tariffs for countries that pose national security concerns vs localities like Ireland," Tewari wrote. The Trump administration launched a Section 232 investigation in April to determine which drug manufacturers are operating in countries that pose a national security threat to the US. Those drugs and drugmakers could face the steepest penalties, if they have not moved or adjusted operations accordingly. The US already largely produces branded drugs domestically, but the lower-cost generics market is mostly based in Asia and Europe. Some pharma executives have indicated they could work with the US to adjust the threat by producing more locally. "We don't make those medicines today, we invented them long ago, but the industry could play a role in helping national security, and that would be fine," Eli Lilly (LLY) CEO David Ricks told Yahoo Finance earlier this year. Mizuho's Holz expects the tariff will be significantly less than Trump's comments. "Makes nearly as much sense as every other threat this administration has uttered since taking over. Will certainly be walked down dramatically. Imagine next headline will be POTUS praising entities such as LLY and JNJ for their patriotism (moving more production domestically)," Holz wrote. "Street has prudently ignored the 200% figure and deemed as erroneous," he added. Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem. Click here for in-depth analysis of the latest health industry news and events impacting stock prices
CNBC
9 hours ago
- Business
- CNBC
AstraZeneca to invest $50 billion in the U.S. as pharma tariffs weigh
AstraZeneca on Monday said it plans to invest $50 billion in bolstering its U.S. manufacturing and research capabilities by 2030, becoming the latest pharmaceutical firm to ramp up its stateside spending in the wake of U.S. trade tariffs. The Anglo-Swedish biotech company, which is headquartered in Cambridge, England, said the "cornerstone" of the commitment would be a new multi-billion dollar facility to produce its weight management and metabolic portfolio, including its oral GLP-1 obesity pill. The facility, planned for the Commonwealth of Virginia, is set to be AstraZeneca's largest single manufacturing investment in the world and will "leverage AI, automation and data analytics to optimize production," the company said. The latest funding will also expand research and development and cell therapy manufacturing in Maryland, Massachusetts, California, Indiana and Texas, and create "tens of thousands of jobs," AstraZeneca added. CEO Pascal Soriot said the commitment underpins the firm's "belief in America's innovation in biopharmaceuticals" and would support its ambition to reach $80 billion in annual revenue by 2030, half of which is expected to come from the U.S. AstraZeneca, which made international headlines by developing one of the key Covid-19 vaccines, has long been prioritizing the U.S. market. The United States accounted for over 40% of the company's annual revenues in 2024. In November, shortly after the U.S. presidential election, AstraZeneca announced a $3.5 billion U.S. investment. Earlier this month, The Times reported that the firm may move its listing from London to the U.S., in what analysts said would be a major blow to the U.K.'s public markets. AstraZeneca is the most valuable business listed on London's FTSE 100. The company declined to comment on the Times report. AstraZeneca's funding announcement follows similar moves by global pharmaceutical firms — including Novartis, Sanofi and Roche and U.S.-headquartered Eli Lilly and Johnson & Johnson — who have all vowed over recent months to ramp up their U.S. investment amid U.S. President Donald Trump's demands to reshore domestic manufacturing. The industry is awaiting further clarity on the Trump administration's pharma tariffs, with the final outcome of a Section 232 investigation into the sector due at the end of this month. An effort to rebalance U.S. drug prices with those paid by other countries is also underway. Trump earlier this month suggested that the industry could face levies of up to 200%, with a brief 12-18 month grace period to allow firms to relocate manufacturing stateside. However, many firms and analysts have dubbed the time frame as insufficient. "Typically for most medicines it's a three to four year horizon. We're working very hard to accelerate that as fast as we can and demonstrate we're making the investments we have planned," Novartis CEO Vas Narasimhan said last week during an earnings call, adding that he hoped the administration would make allowances.
Economic Times
11 hours ago
- Business
- Economic Times
Rising US fiscal risk signals dollar weakness and yield spike ahead: Jahangir Aziz
So, with the increase in fiscal deficit and reduced foreign borrowing, the US might experience higher yields and a weaker dollar, as the government's actions increase the risk premium on the country. This is how I see the dollar and US yields moving. Synopsis JPMorgan's Jahangir Aziz highlights the potential impact of a July 31st court ruling on existing tariffs, overshadowing the August 1st deadline. The court's decision on IEEPA could invalidate current trade deals and lead to prolonged uncertainty. Despite market resilience, the delayed impact of tariffs on inflation and ongoing negotiations with India remain key concerns. "So, while August 1st is a key deadline, July 31st—just the day before—could have a meaningful and material impact on what we wake up to on August 1st or 2nd," says Jahangir Aziz, JPMorgan. ADVERTISEMENT Help us analyze and understand what the key talking points for market participants are right now. The 9th July deadline has already passed, and we're now waiting for the 1st of August. However, there haven't been any major announcements so far, and many tariff deals are still pending. How do you think market participants will interpret this, especially since the markets have shown resilience recently? Jahangir Aziz: The markets are clearly showing resilience and are shrugging off the new or recent set of tariffs that have been announced. However, let me make two points. First, August 1st is after July 31st, and the market has somewhat forgotten that amidst all the talk about new tariffs and the Fed. On July 31st, the federal appeals court will begin hearing the case of the appeal made by the government regarding a case they lost in the US Court of International Trade. The court ruled that all tariffs imposed under IEEPA (International Emergency Economic Powers Act), which includes universal tariffs and reciprocal tariffs, are inadmissible. Depending on what the appeals court does on July 31st, or maybe in a couple of days (since it is an appeals court), these tariffs could become moot. This is because IEEPA, the act on which both the tariffs and the reciprocal tariffs are based, could no longer be used. In that case, we could face more months of uncertainty, as the US government may then shift away from IEEPA tariffs to tariffs based on other sections of the trade act, such as Section 301, Section 232, etc. So, while August 1st is a key deadline, July 31st—just the day before—could have a meaningful and material impact on what we wake up to on August 1st or 2nd. Also, we'd like to get your view on developments regarding the Fed chair. With US inflation seeming to be under control, if there is no rate cut as the market expects, do you think this could lead to a change in leadership at the Fed? Jahangir Aziz: That's a completely different issue, and it's hard to speculate on it. But let me start with your first point. You mentioned that inflation is under control. Well, if you look at goods inflation last month and exclude autos (which have dampened due to price cuts by Japanese auto manufacturers selling to their subsidiaries), goods inflation in the US was running at around 5.5%. Even though there has been a significant shift away from China to countries with lower tariffs, like ASEAN, Vietnam, Malaysia, Thailand, etc., and many firms are absorbing tariff increases on their profit margins for now, goods inflation—excluding autos—still stands at 5.5%. The tariff impact is taking longer than expected. As we had anticipated, it would take 2 to 4 months for the tariff effects to hit inflation. Just because it isn't showing up in the data now doesn't mean it won't later. The Fed is aware of this and will be watching for signs of this pass-through and also keeping an eye on non-farm payrolls. Although the most recent non-farm payrolls report showed a surprise number of 147,000, the private sector non-farm payrolls stood at just 74,000—one of the lowest in the past two years. I want to talk about India. The only missing piece seems to be what happens with tariffs, while India is holding ground. There doesn't seem to be a consensus yet on how much tariffs India will face. Where do you think this situation is headed? Jahangir Aziz: My guess is that since India hasn't received a letter yet, at least negotiations are still ongoing, which is a very good sign. Unlike countries like Japan or Korea, which have already received letters and now have to scramble to start trade deals, India's negotiations are still in progress, and the US is not just saying, "Here's the deal, take it or leave it." So that's a positive sign. As for where the tariffs will settle, I don't have an insider perspective, but my guess is that India will likely try to protect its agricultural sector, as it should. India would probably be willing to compromise on other sectors. But suppose we have a trade deal tomorrow, and then the federal court rules that IEEPA tariffs are inadmissible, upholding the US CIT court's decision. Then, what happens to the trade deal? These deals are being made on the assumption that IEEPA tariffs will continue. But if the appeals court, or even the Supreme Court, rules otherwise, then none of these trade deals would make sense. What kind of deal are you cutting under those circumstances? The way markets are digesting tariff news seems a little different this time. We aren't seeing a surge in gold prices or the dollar index, and emerging market sentiment is holding up relatively well. How do you see the dollar moving from these levels, particularly with regard to its impact on emerging market sentiment? Jahangir Aziz: I look at the US dollar and 10-year treasury yields through the lens of my experience working with emerging market countries. I'm not suggesting the US is an emerging market—far from it. The US probably has the best private sector in the world. However, looking at it from this perspective, consider this: the US fiscal deficit for fiscal year 2025 is projected to be around 6.2%, and for 2026, it could be around 7.2%. At the same time, the US is seeking to impose tariffs to address its trade balance, which is expected to decrease from 4% to about 3.5% due to tariffs. Here's the situation: the US is increasing its fiscal deficit by 1% while also reducing its current account deficit by 0.5%, meaning its foreign borrowing will decrease. To make up for this, the US needs to find 1.5% of GDP in increased domestic savings. If this were an emerging market country, we'd expect bond yields to rise and the exchange rate to depreciate. So, with the increase in fiscal deficit and reduced foreign borrowing, the US might experience higher yields and a weaker dollar, as the government's actions increase the risk premium on the country. This is how I see the dollar and US yields moving. 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Time of India
11 hours ago
- Business
- Time of India
Rising US fiscal risk signals dollar weakness and yield spike ahead: Jahangir Aziz
"So, while August 1st is a key deadline, July 31st—just the day before—could have a meaningful and material impact on what we wake up to on August 1st or 2nd," says Jahangir Aziz , JPMorgan . Help us analyze and understand what the key talking points for market participants are right now. The 9th July deadline has already passed, and we're now waiting for the 1st of August. However, there haven't been any major announcements so far, and many tariff deals are still pending. How do you think market participants will interpret this, especially since the markets have shown resilience recently? Jahangir Aziz: The markets are clearly showing resilience and are shrugging off the new or recent set of tariffs that have been announced. However, let me make two points. First, August 1st is after July 31st, and the market has somewhat forgotten that amidst all the talk about new tariffs and the Fed. On July 31st, the federal appeals court will begin hearing the case of the appeal made by the government regarding a case they lost in the US Court of International Trade . The court ruled that all tariffs imposed under IEEPA (International Emergency Economic Powers Act), which includes universal tariffs and reciprocal tariffs, are inadmissible. Depending on what the appeals court does on July 31st, or maybe in a couple of days (since it is an appeals court), these tariffs could become moot. This is because IEEPA, the act on which both the tariffs and the reciprocal tariffs are based, could no longer be used. In that case, we could face more months of uncertainty, as the US government may then shift away from IEEPA tariffs to tariffs based on other sections of the trade act, such as Section 301, Section 232, etc. So, while August 1st is a key deadline, July 31st—just the day before—could have a meaningful and material impact on what we wake up to on August 1st or 2nd. 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With US inflation seeming to be under control, if there is no rate cut as the market expects, do you think this could lead to a change in leadership at the Fed? Jahangir Aziz: That's a completely different issue, and it's hard to speculate on it. But let me start with your first point. You mentioned that inflation is under control. Well, if you look at goods inflation last month and exclude autos (which have dampened due to price cuts by Japanese auto manufacturers selling to their subsidiaries), goods inflation in the US was running at around 5.5%. Even though there has been a significant shift away from China to countries with lower tariffs, like ASEAN, Vietnam, Malaysia, Thailand, etc., and many firms are absorbing tariff increases on their profit margins for now, goods inflation—excluding autos—still stands at 5.5%. The tariff impact is taking longer than expected. As we had anticipated, it would take 2 to 4 months for the tariff effects to hit inflation. Just because it isn't showing up in the data now doesn't mean it won't later. The Fed is aware of this and will be watching for signs of this pass-through and also keeping an eye on non-farm payrolls. Although the most recent non-farm payrolls report showed a surprise number of 147,000, the private sector non-farm payrolls stood at just 74,000—one of the lowest in the past two years. I want to talk about India. The only missing piece seems to be what happens with tariffs, while India is holding ground. There doesn't seem to be a consensus yet on how much tariffs India will face. Where do you think this situation is headed? Jahangir Aziz: My guess is that since India hasn't received a letter yet, at least negotiations are still ongoing, which is a very good sign. Unlike countries like Japan or Korea, which have already received letters and now have to scramble to start trade deals, India's negotiations are still in progress, and the US is not just saying, "Here's the deal, take it or leave it." So that's a positive sign. As for where the tariffs will settle, I don't have an insider perspective, but my guess is that India will likely try to protect its agricultural sector, as it should. India would probably be willing to compromise on other sectors. But suppose we have a trade deal tomorrow, and then the federal court rules that IEEPA tariffs are inadmissible, upholding the US CIT court's decision. Then, what happens to the trade deal? These deals are being made on the assumption that IEEPA tariffs will continue. But if the appeals court, or even the Supreme Court, rules otherwise, then none of these trade deals would make sense. What kind of deal are you cutting under those circumstances? The way markets are digesting tariff news seems a little different this time. We aren't seeing a surge in gold prices or the dollar index, and emerging market sentiment is holding up relatively well. How do you see the dollar moving from these levels, particularly with regard to its impact on emerging market sentiment? Jahangir Aziz: I look at the US dollar and 10-year treasury yields through the lens of my experience working with emerging market countries. I'm not suggesting the US is an emerging market—far from it. The US probably has the best private sector in the world. However, looking at it from this perspective, consider this: the US fiscal deficit for fiscal year 2025 is projected to be around 6.2%, and for 2026, it could be around 7.2%. Live Events At the same time, the US is seeking to impose tariffs to address its trade balance, which is expected to decrease from 4% to about 3.5% due to tariffs. Here's the situation: the US is increasing its fiscal deficit by 1% while also reducing its current account deficit by 0.5%, meaning its foreign borrowing will decrease. To make up for this, the US needs to find 1.5% of GDP in increased domestic savings. If this were an emerging market country, we'd expect bond yields to rise and the exchange rate to depreciate. So, with the increase in fiscal deficit and reduced foreign borrowing, the US might experience higher yields and a weaker dollar, as the government's actions increase the risk premium on the country. This is how I see the dollar and US yields moving.
Yahoo
a day ago
- Business
- Yahoo
Cleveland-Cliffs looks to sell idle steel plants to data center developers
This story was originally published on Manufacturing Dive. To receive daily news and insights, subscribe to our free daily Manufacturing Dive newsletter. Dive Brief: Steelmaker Cleveland-Cliffs is looking to sell its idle mills and certain assets to potential buyers, including data center developers, in an effort to reduce its overall debt and rightsize operations, EVP and CFO Celso Goncalves said in an earnings call Monday. The company is in talks with advisor JPMorgan, exploring the potential sale of certain 'non-core' operating assets worth billions of dollars, Goncalves said. It is also hearing from buyers interested in its recently idled mills in Riverdale, Illinois, as well as Steelton and Conshohocken, Pennsylvania. 'These sites…are all uniquely positioned geographically and have what data center developers are looking for — access to power and water with the infrastructure already in place,' Goncalves said. If any of the sales are successful, he said the proceeds will go toward debt reduction. Dive Insight: Cleveland-Cliffs, one of the largest producers of flat-rolled steel, has been in downsizing mode in response to weak automotive production and rising prices. Between March and May, it fully or partially idled six facilities, resulting in layoffs affecting 2,000 workers across Michigan, Illinois, Minnesota and Pennsylvania. The company is expecting these changes to result in annual cost savings of about $310 million, according to an investor presentation. It is not expecting these changes to hurt steel production output. 'We are laser-focused on cost-cutting and steel sales, and that's the way we will continue to execute going forward,' President and CEO Lourenco Goncalves said on the earnings call. In the second quarter, Cleveland-Cliffs reported revenue of $4.9 billion, driven by record-high steel shipments, higher pricing and lower costs. The results are up from Q1 and the same period last year. The steelmaker also recorded a net loss of $470 million, which included a one-time cost of $323 million related to its recent plant idlings. Looking ahead, Cleveland-Cliffs is expecting steel sales prices to remain favorable as slab prices decline. A third-party slab contract is set to expire in less than five months, which should allow the company to shift sales to higher-margin opportunities. The company is also expecting raw material costs to continue improving, citing a $15 per ton decrease in costs compared to Q1. On the call, the CEO lauded the Trump administration's Section 232 steel tariffs, which increased from 25% to 50% on June 4, and have played a key role in addressing issues with foreign competitors. 'They receive direct subsidies from their governments, and they do not have to comply with the stringent environmental standards and laws we have in place in the United States,' Goncalves said. Additionally, he pressured Federal Reserve Chair Jerome Powell to lower interest rates to spur U.S. consumers to buy more cars, and for Canadian Prime Minister Mark Carney to bolster the country's steel industry with stronger trade protections. 'The United States remains the most desirable market for steel,' Goncalves said. Recommended Reading Cleveland-Cliffs to lay off 950 workers in Illinois, Pennsylvania Sign in to access your portfolio
