Donald Trump has threatened to increase tariffs on Australian pharmaceuticals to 250 per cent in a major blow to the country.

The US President initially proposed 200 per cent tariffs on foreign pharmaceutical imports last month, claiming they will be phased in over a year or more.

He has since hinted to a US business news channel that the tariff will be as high as 250 per cent.

Pharmaceuticals are Australia’s third-biggest export to the US, behind gold and meat.

About $2.1billion of pharmaceuticals were exported to the US in 2024, according to the Australian Bureau of Statistics.

They include blood products, vaccines, packaged medicines and bandages.

‘We’ll be putting initially (a) small tariff on pharmaceuticals, but in one year, one-and-a-half years maximum, it’s going to go to 150 per cent,’ Trump told CNBC on Tuesday.

‘And then it’s going to go to 250 per cent because we want pharmaceuticals made in our country.’

Trump added that he’ll make a final decision on foreign pharmaceutical imports ‘within the next week or so.’

The update comes after he issued an ultimatum to 17 pharmaceutical companies to lower medication prices for US consumers in line with many other countries.

He also ordered them to return excess overseas revenue from raising prices in other countries to offset the reduced US prices.

Americans pay almost four times more for medicines than Australians, who access subsided prescriptions through the government’s Pharmaceutical Benefits Scheme.

‘Make no mistake: a collaborative effort towards achieving global pricing parity would be the most effective path for companies, the government and American patients,’ Trump threatened.

‘If you refuse to step up, we will deploy every tool in our arsenal to protect Americans from abusive drug pricing practices.’

Federal treasurer Jim Chalmers recently revealed that the Albanese government was ‘urgently seeking’ details from the US about the pharmaceutical tariff, which could strip billions from the economy.

‘Our pharmaceuticals industry is much more exposed to the US market, and that’s why we’re seeking some more detail on what’s been announced,’ he told ABC Radio National.

But I want to make it really clear once again, as we have on a number of occasions before, our Pharmaceutical Benefits Scheme is not something [we are] willing to trade away.

‘They’re obviously very concerning developments. We are talking about billions of dollars of exports to the US when it comes to pharmaceuticals.’

Prime Minister Anthony Albanese has already announced that the PBS was ‘not up for negotiation’.

Former federal trade minister Simon Birmingham, who held the portfolio during the first Trump administration, said successive US governments regarded the PBS as an obstacle to American drug company profits.

‘American pharmaceutical companies have long argued they see the PBS as having unfair rules that are overly generous when it comes to things such as generic drugs,’ he previously told Daily Mail Australia.

‘And in doing so limit the ability of those companies to be able to fulfill the full economic potential of their investment in new drugs.’