Business
Trump’s Tariff Threat for Drug imports Poses Big Political Risks
President Trump’s decision to move a step closer to imposing tariffs on imported medicines poses considerable political risk, because Americans could face higher prices and more shortages of critical drugs.
The Trump administration filed a federal notice on Monday saying that it had begun an investigation into whether imports of medicines and pharmaceutical ingredients threaten America’s national security, an effort to lay the groundwork for possible tariffs on foreign-made drugs.
Mr. Trump has repeatedly said he planned to impose such levies, to shift overseas production of medicines back to the United States. Experts said that tariffs were unlikely to achieve that goal: Moving manufacturing would be hugely expensive and would take years.
It was not clear how long the investigation would last or when the planned tariffs might go into effect. Mr. Trump started the inquiry under a legal authority known as Section 232 that he has used for other industries like cars and lumber.
Mr. Trump said in remarks to reporters on Monday that pharmaceutical tariffs would come in the “not too distant future.”
“We don’t make our own drugs anymore,” Mr. Trump said. “The drug companies are in Ireland, and they’re in lots of other places, China.”
While some drugs are made at least in part in the United States, America’s reliance on China for medicines has generated alarm for years, with both Republicans and Democrats identifying it as a national security vulnerability.
Many drugs are not produced without at least one stage of the manufacturing process happening in China. Even India’s giant generic drug sector is deeply dependent on China, because Indian manufacturers typically obtain their raw materials from Chinese plants.
Imposing disruptive levies on lifesaving medications creates risks for Mr. Trump that were not a major concern with some of his other tariff targets, like steel and aluminum, where Americans generally aren’t directly exposed to increased prices.
He could face a harsh backlash if pharmaceutical tariffs lead to significant drug price increases or shortages for patients. The number of drug shortages reached a record-level high last year. Americans fill several billion prescriptions a year, on top of purchasing over-the-counter products like cough syrup and Tylenol.
Mr. Trump has not talked much about lowering drug prices in his second term, nor did he make it a top issue in his 2024 campaign.
If pharmaceutical tariffs cause an increase in any drug prices, Democrats could jump on the issue for the midterm elections next year and try to undercut Mr. Trump’s popularity among working-class voters.
Democrats have already seized on the issue. In a letter sent to Trump officials last week, a group of lawmakers led by Representatives Doris Matsui of California and Brad Schneider of Illinois wrote that “reckless tariffs” on medicines threatened to harm Americans.
“The supply disruptions of critical medical products will unavoidably hurt U.S. patients, force providers to make impossible rationing decisions, and potentially even result in death as treatments are delayed, or more effective medicines and products are swapped for less effective alternatives,” they wrote.
Kush Desai, a spokesman for the White House, said in a statement on Monday that “President Trump has long been clear about the importance of reshoring manufacturing that is critical to our country’s national and economic security.”
Targeting pharmaceuticals also risks further inflaming relations with allies like the European Union and India, whose economies are supported by drug exports to the United States. Officials of those countries fear that drug tariffs could prompt companies to renege on investments, resulting in a loss of jobs, factories and tax revenue.
Along with cars and electronics, pharmaceuticals are one of the categories of goods that the United States imports the most, measured by value.
Tariffs on drugs would add tens of billions of dollars of import costs for a powerful industry that relies on a complex global supply chain. Production of most medications consumed in the United States happens in more than one part of the world, with plants in different countries handling different stages of the process.
Expensive patented medications, like the popular weight-loss drug Wegovy, are more likely to be made in Europe or the United States.
China and India do most of the production of cheaper generic drugs, which account for the vast majority of U.S. prescriptions. For example, plants in those countries make nearly all of the world’s supply of the active ingredients in the painkiller ibuprofen and the antibiotic ciprofloxacin, according to Clarivate, an industry data provider.
Pharmaceuticals are the latest sector that Mr. Trump has targeted. Tariffs of 25 percent are already in effect for imported steel, aluminum and cars. The Trump administration has also initiated Section 232 investigations, or inquiries into national security concerns, for copper, lumber and computer chips.
Investigations under the 232 provision must be completed within nine months.
The drug industry has been lobbying the Trump administration to phase in tariffs gradually or to exempt certain types of products, such as medications at risk of shortages or those deemed essential, like antibiotics.
John Murphy III, the head of a trade group that represents manufacturers of generic drugs, said in a statement on Monday that tariffs “will only amplify the problems that already exist in the U.S. market for affordable medicines.”
The tariffs would be paid by drug companies importing products or ingredients into the United States. Many of those manufacturers would most likely try to pass at least some of the added costs to employers and government programs like Medicare and Medicaid that cover most of the tab for Americans’ prescription drugs. That would ultimately affect patients.
Levies could cause shortages of some cheaper generic drugs, because prices are so close to production costs. Manufacturers with such thin margins may be forced to curtail or end production.
Industry experts said they were not concerned about shortages for brand-name drugs, which generally have high profit margins that could absorb tariffs.
Patients whose insurance requires them to pay a deductible or a percentage of a drug’s price could eventually face higher out-of-pocket costs for some drugs. They may also have to pay a higher co-payment if shortages resulting from the tariffs force them to switch to a different, pricier medication. In future years, people could face higher health insurance premiums.
In some cases, contractual agreements and steep financial penalties may discourage manufacturers from sharply raising prices. With patented products, manufacturers typically have such large margins that their sales would still be highly profitable even if they absorbed the cost of tariffs.
David Ricks, the chief executive of Eli Lilly, told the BBC earlier this month that his company expected to eat the cost of tariffs. But Lilly could reduce its research spending or cut staffing as a result, he said.
Mr. Trump has been saying that his tariffs will prompt drugmakers to move their overseas production back to the United States. In recent weeks, several of the industry’s richest companies — Eli Lilly, Johnson & Johnson and Novartis — announced plans to spend billions of dollars to build new plants in the United States.
But experts say the tariffs aren’t nearly enough to bring most drug production back to the United States. The obstacles are especially steep with crucial generic drugs. Building a new plant takes years. Even shifting production to an existing American plant may be too costly. Labor and other production expenses are much higher in the United States.
Joaquin Duato, chief executive of Johnson & Johnson, said on a call with analysts on Tuesday that “if what you want is to build manufacturing capacity in the U.S., both in med-tech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy.”
The Trump administration has been taking aim at Ireland, where nearly all of the largest American drugmakers have a manufacturing presence, in some cases dating back decades. One of Ireland’s biggest appeals for the industry is the tax advantages it offers. Some drugmakers shift their profits there to lower their overall tax bills.
Last month, Mr. Trump said that Ireland “took our pharmaceutical companies away.” Howard Lutnick, the commerce secretary, said that Ireland was running a “tax scam” that American pharmaceutical companies were exploiting. “That’s got to end,” Mr. Lutnick said.
Some of the industry’s biggest blockbusters, including the cancer drug Keytruda and the anti-wrinkle injection Botox, are partly produced in Ireland. The United States imports more pharmaceutical products, as measured by their value, from Ireland than any other country.
Irish officials fear that tariffs could prompt drugmakers to pull back from investments in the country. But experts said that drugmakers may be reluctant to undergo the costly, disruptive process of uprooting their operations there, especially while uncertainty persists about how long Mr. Trump’s tariffs will last.
Pharmaceuticals have historically been spared from tariffs under a World Trade Organization agreement meant to ensure that patients have access to vital medications.
Medications were mostly exempted from the round of global tariffs Mr. Trump announced earlier this month and then partly delayed for 90 days. Drugmakers importing from China into the United States have been subject to tariffs, initially 10 percent and later 20 percent, that Mr. Trump had imposed on Chinese imports earlier this year.
Ana Swanson contributed reporting.
The sale of Warner Bros. — whether in pieces to Netflix or in its entirety to Paramount — is stirring mounting worries among Hollywood union leaders about the possible fallout for their members.
Unions representing writers, directors, actors and crew workers have voiced growing concerns that further consolidation in the media industry will reduce competition, potentially causing studios to pay less for content, and make it more difficult for people to find work.
“We’ve seen this movie before, and we know how it ends,” said Michele Mulroney, president of the Writers Guild of America West. “There are lots of promises made that one plus one is going to equal three. But it’s very hard to envision how two behemoths, for example, Warner Bros. and Netflix … can keep up the level of output they currently have.”
Last week, Netflix announced it agreed to buy Warner Bros. Discovery’s film and TV studio, Burbank lot, HBO and HBO Max for $27.75 a share, or $72 billion. It also agreed to take on more than $10 billion of Warner Bros.’ debt. But Paramount, whose previous offers were rebuffed by Warner Bros., has appealed directly to shareholders with an alternative bid to buy all of the company for about $78 billion.
Paramount said it will have more than $6 billion in cuts over three years, while also saying the combined companies will release at least 30 movies a year. Netflix said it expects its deal will have $2 billion to $3 billion in cost cuts.
Those cuts are expected to trigger thousands of layoffs across Hollywood, which has already been squeezed by the flight of production overseas and a contraction in the once booming TV business.
Mulroney said that employment for WGA writers in episodic television is down as much as 40% when comparing the 2023-2024 writing season to 2022-2023.
Executives from both companies have said their deals would benefit creative talent and consumers.
But Hollywood union leaders are skeptical.
“We can hear the generalizations all day long, but it doesn’t really mean anything unless it’s on paper, and we just don’t know if these companies are even prepared to make promises in writing,” said Lindsay Dougherty, Teamsters at-large vice president and principal officer for Local 399, which represents drivers, location managers and casting directors.
Dougherty said the Teamsters have been engaged with both Netflix and Paramount, seeking commitments to keep filming in Los Angeles.
“We have a lot of members that are struggling to find work, or haven’t really worked in the last year or so,” Dougherty said.
Mulroney said her union has concerns about both bids, either by Netflix or Paramount.
“We don’t think the merger is inevitable,” Mulroney said. “We think there’s an opportunity to push back here.”
If Netflix were to buy Warner Bros.’ TV and film businesses, Mulroney said that could further undermine the theatrical business.
“It’s hard to imagine them fully embracing theatrical exhibition,” Mulroney said. “The exhibition business has been struggling to get back on its feet ever since the pandemic, so a move like this could really be existential.”
But the Writers Guild also has issues with Paramount’s bid, Mulroney said, noting that it would put Paramount-owned CBS News and CNN under the same parent company.
“We have censorship concerns,” Mulroney said. “We saw issues around [Stephen] Colbert and [Jimmy] Kimmel. We’re concerned about what the news would look like under single ownership here.”
That question was made more salient this week after President Trump, who has for years harshly criticized CNN’s hosts and news coverage, said he believes CNN should be sold.
The worries come as some unions’ major studio contracts, including the DGA, WGA and performers guild SAG-AFTRA, are set to expire next year. Two years ago, writers and actors went on a prolonged strike to push for more AI protections and better wages and benefits.
The Directors Guild of America and performers union SAG-AFTRA have voiced similar objections to the pending media consolidation.
“A deal that is in the interest of SAG-AFTRA members and all other workers in the entertainment industry must result in more creation and more production, not less,” the union said.
SAG-AFTRA National Executive Director Duncan Crabtree-Ireland said the union has been in discussions with both Paramount and Netflix.
“It is as yet unclear what path forward is going to best protect the legacy that Warner Brothers presents, and that’s something that we’re very actively investigating right now,” he said.
It’s not clear, however, how much influence the unions will have in the outcome.
“They just don’t have a seat at the ultimate decision making table,” said David Smith, a professor of economics at the Pepperdine Graziadio Business School. “I expect their primary involvement could be through creating more awareness of potential challenges with a merger and potentially more regulatory scrutiny … I think that’s what they’re attempting to do.”
Businessman Brian Kahn has pleaded guilty to conspiracy to commit securities fraud in a case that brought down a hedge fund, helped lead to the bankruptcy of a retailer and damaged West Los Angeles investment bank B. Riley Financial.
Kahn, 52, admitted in a Trenton, N.J., federal court Wednesday to hiding trading losses that brought down Prophecy Asset Management in 2020. The Securities and Exchange Commission alleged the losses exceeded $400 million.
An investor lawsuit has accused Kahn of funneling some of the fund’s money to Franchise Group, a Delaware retail holding company assembled by the investor that owned Vitamin Shoppe, Pet Supplies Plus and other chains.
B. Riley provided $600 million through debt it raised to finance a $2.8-billion management buyout led by Kahn in 2023. It also took a 31% stake in the company and lent Kahn’s investment fund $201 million, largely secured with shares of Franchise Group.
Kahn had done deals with B. Riley co-founder Bryant Riley before partnering with the L.A. businessman on Franchise Group.
However, the buyout didn’t work out amid fallout from the hedge fund scandal and slowing sales at the retailers. Franchise Group filed for bankruptcy in November 2024. A slimmed-down version of the company emerged from Chapter 11 in June.
B. Riley has disclosed in regulatory filings that the firm and Riley have received SEC subpoenas regarding its dealings with Kahn, Franchise group and other matters.
Riley, 58, the firm’s chairman and co-chief executive, has denied knowledge of wrongdoing, and an outside law firm reached the same conclusion.
The failed deal led to huge losses at the financial services firm that pummeled B. Riley’s stock, which had approached $90 in 2021. Shares were trading Friday at $3.98.
The company has marked down its Franchise Group investment, and has spent the last year or so paring debt through refinancing, selling off parts of its business and other steps, including closing offices.
The company announced last month it is changing its name to BRC Group Holdings in January. It did not immediately respond to requests for comment.
At Wednesday’s plea hearing, Assistant U.S. Atty. Kelly Lyons said that Kahn conspired to “defraud dozens of investors who had invested approximately $360 million” through “lies, deception, misleading statements and material omissions.”
U.S. District Judge Michael Shipp released Kahn on a $100,000 bond and set an April 2 sentencing date. He faces up to five years in prison. Kahn, his lawyer and Lyons declined to comment after the hearing.
Kahn is the third Prophecy official charged over the hedge fund’s collapse. Two other executives, John Hughes and Jeffrey Spotts, have also been charged.
Hughes pleaded guilty and is cooperating with prosecutors. Spotts pleaded not guilty and faces trial next year. The two men and Kahn also have been sued by the SEC over the Prophecy collapse.
Bloomberg News contributed to this report.
Chatty bots are sharing their hot takes through hundreds of thousands of AI-generated podcasts. And the invasion has just begun.
Though their banter can be a bit banal, the AI podcasters’ confidence and research are now arguably better than most people’s.
“We’ve just begun to cross the threshold of voice AI being pretty much indistinguishable from human,” said Alan Cowen, chief executive of Hume AI, a startup specializing in voice technology. “We’re seeing creators use it in all kinds of ways.”
AI can make podcasts sound better and cost less, industry insiders say, but the growing swarm of new competitors entering an already crowded market is disrupting the industry.
Some podcasters are pushing back, requesting restrictions. Others are already cloning their voices and handing over their podcasts to AI bots.
Popular podcast host Steven Bartlett has used an AI clone to launch a new kind of content aimed at the 13 million followers of his podcast “Diary of a CEO.” On YouTube, his clone narrates “100 CEOs With Steven Bartlett,” which adds AI-generated animation to Bartlett’s cloned voice to tell the life stories of entrepreneurs such as Steve Jobs and Richard Branson.
Erica Mandy, the Redondo Beach-based host of the daily news podcast called “The Newsworthy,” let an AI voice fill in for her earlier this year after she lost her voice from laryngitis and her backup host bailed out.
She fed her script into a text-to-speech model and selected a female AI voice from ElevenLabs to speak for her.
“I still recorded the show with my very hoarse voice, but then put the AI voice over that, telling the audience from the very beginning, I’m sick,” Mandy said.
Mandy had previously used ElevenLabs for its voice isolation feature, which uses AI to remove ambient noise from interviews.
Her chatbot host elicited mixed responses from listeners. Some asked if she was OK. One fan said she should never do it again. Most weren’t sure what to think.
“A lot of people were like, ‘That was weird,’” Mandy said.
In podcasting, many listeners feel strong bonds to hosts they listen to regularly. The slow encroachment of AI voices for one-off episodes, canned ad reads, sentence replacement in postproduction or translation into multiple languages has sparked anger as well as curiosity from both creators and consumers of the content.
Augmenting or replacing host reads with AI is perceived by many as a breach of trust and as trivializing the human connection listeners have with hosts, said Megan Lazovick, vice president of Edison Research, a podcast research company.
Jason Saldanha of PRX, a podcast network that represents human creators such as Ezra Klein, said the tsunami of AI podcasts won’t attract premium ad rates.
“Adding more podcasts in a tyranny of choice environment is not great,” he said. “I’m not interested in devaluing premium.”
Still, platforms such as YouTube and Spotify have introduced features for creators to clone their voice and translate their content into multiple languages to increase reach and revenue. A new generation of voice cloning companies, many with operations in California, offers better emotion, tone, pacing and overall voice quality.
Hume AI, which is based in New York but has a big research team in California, raised $50 million last year and has tens of thousands of creators using its software to generate audiobooks, podcasts, films, voice-overs for videos and dialogue generation in video games.
“We focus our platform on being able to edit content so that you can take in postproduction an existing podcast and regenerate a sentence in the same voice, with the same prosody or emotional intonation using instant cloning,” said company CEO Cowen.
Some are using the tech to carpet-bomb the market with content.
Los Angeles podcasting studio Inception Point AI has produced its 200,000 podcast episodes, accounting for 1% of all podcasts published on the internet, according to CEO Jeanine Wright.
The podcasts are so cheap to make that they can focus on tiny topics, like local weather, small sports teams, gardening and other niche subjects.
Instead of a studio searching for a specific “hit” podcast idea, it takes just $1 to produce an episode so that they can be profitable with just 25 people listening.
“That means most of the stuff that we make, we have really an unlimited amount of experimentation and creative freedom for what we want to do,” Wright said.
One of its popular synthetic hosts is Vivian Steele, an AI celebrity gossip columnist with a sassy voice and a sharp tongue. “I am indeed AI-powered — which means I’ve got receipts older than your grandmother’s jewelry box, and a memory sharper than a stiletto heel on marble. No forgetting, no forgiving, and definitely no filter,” the AI discloses itself at the start of the podcast.
“We’ve kind of molded her more towards what the audience wants,” said Katie Brown, chief content officer at Inception Point, who helps design the personalities of the AI podcasters.
Inception Point has built a roster of more than 100 AI personalities whose characteristics, voices and likenesses are crafted for podcast audiences. Its AI hosts include Clare Delish, a cooking guidance expert, and garden enthusiast Nigel Thistledown.
The technology also makes it easy to get podcasts up quickly. Inception has found some success with flash biographies posted promptly in connection to people in the news. It uses AI software to spot a trending personality and create two episodes, complete with promo art and a trailer.
When Charlie Kirk was shot, its AI immediately created two shows called “Charlie Kirk Death” and “Charlie Kirk Manhunt” as a part of the biography series.
“We were able to create all of that content, each with different angles, pulling from different news sources, and we were able to get that content up within an hour,” Wright said.
Speed is key when it comes to breaking news, so its AI podcasts reached the top of some charts.
“Our content was coming up, really dominating the list of what people were searching for,” she said.
Across Apple and Spotify, Inception Point podcasts have now garnered 400,000 subscribers.
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