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.
Layoffs have continued with another tech company saying it was cutting people to enable it to use more artificial intelligence.
Groupon announced in a security filing this month that it will cut up to 400 jobs, or nearly 25% of its worldwide workforce, as part of a broader restructuring plan to make the platform AI-native. The Chicago company plans to carry out the layoffs in the coming months.
Earlier the company’s Chief Executive Officer Dušan Šenkypl had said the company “fell short of our expectations” last quarter.
Since 2022, more than 800,000 tech workers have been laid off, according to Layoffs.fyi, a website that tracks job cuts.
The surge in pink slips started in 2023, when companies that had gone on hiring sprees during the COVID-19 pandemic began to cut back. From January to April this year, U.S. tech employers announced 85,411 job cuts, up 33% from the same period last year, according to global outplacement and executive coaching firm Challenger, Gray & Christmas.
Groupon said in the filing that the decision to shift toward an AI-based company is to “better deliver on our mission, serving both customers and merchants.”
The company said the layoffs will cost it as much as $13 million, but save it more than $20 million per year.
This announcement comes as many e-commerce companies are shifting their business models to AI to reduce costs by automating many roles.
Artificial intelligence has also triggered fierce competition for top talent and is also fueling tens of thousands of layoffs this year. The result is that the class divide is widening in Silicon Valley as a tiny group of employees are landing unprecedented packages for AI skills, while many others struggle to find work.
The have-nots are doing everything that used to guarantee great jobs — refreshing resumes, optimizing LinkedIn profiles and doing interviews — but companies are much more picky these days. The tech jobless are rethinking their lives. Some are taking pay cuts, while others are leaving tech. Some are going back to study or launch startups. Some have retired.
Groupon shares, which have fallen 27% over the last 12 months, slipped 1% on Thursday to $21.20.
Walt Disney Co.’s ABC has filed renewal applications with the Federal Communications Commission “under protest” after an order mandating a years-early review of the network’s eight television station licenses.
The criticism was part of the network’s applications for the FCC review, which were filed ahead of a deadline Thursday. In an objection to the early renewal, Disney’s New York station WABC called the FCC order “unlawful, arbitrary and unconstitutional” and said it was “legally indefensible.”
“The Commission had not demanded early renewal in over five decades,” the station wrote in its filing. “And it has never before demanded simultaneous license renewal applications from a group of stations commonly owned with a network as it has here. The order has no legitimate purpose.”
The licenses for the eight ABC-owned TV stations, including KABC in Los Angeles, were originally scheduled for renewal between 2028 and 2031.
The FCC order came shortly after ABC late-night host Jimmy Kimmel made a joke about First Lady Melania Trump looking like an “expectant widow” days before a gunman tried to breach the White House Correspondents’ Assn. gala last month that President Trump attended.
Trump has frequently threatened to have TV station licenses pulled when he is unhappy with their coverage, but the order is the first time the government has acted on his wishes, sparking anger from free speech advocates. The FCC has said the order is part of an investigation into whether Disney’s diversity and inclusion policies violate federal law and the agency’s rules against “unlawful discrimination.”
In its response, WABC said the “only plausible reason” to issue the order was to “punish the station for speech the government does not like.”
“The ultimate injury here is not to the station or its parent company. It is to the public,” WABC wrote. “When a broadcaster must weigh regulatory retaliation before making editorial decisions, the public loses access to journalism that is free from government influence.”
FCC Chairman Brendan Carr said in a statement Thursday that Disney filed its applications to renew its broadcast licenses only after the company was told its previous answers were “disingenuous, deficient and improper.”
“Contrary to Disney’s claim that the FCC called in their broadcast licenses for early renewal for no reason, the record shows something very different,” Carr said. “Broadcast licensees have a unique obligation to operate in the public interest. The FCC will follow the facts and law wherever they may lead.”
FCC Commissioner Anna M. Gomez, the panel’s only Democrat who has backed Disney in its fight, cheered the Burbank media and entertainment company’s filing, saying in a post on X that she was “glad to see them expose the FCC’s actions as nothing more than naked political retribution and an unlawful assault on free speech and a free press.”
Times staff writer Meg James contributed to this report.
Andrew here. Warning: If you bet on prediction markets about things you could know about from your work, it may be insider trading. That’s the lesson from new charges against an employee of Google.
Also, Jamie Dimon is thinking about spending $20 billion on acquisitions; we go through some possible targets. And take our quiz about the U.F.C. fight scheduled to take place at the White House.
Gaming prediction markets
In the public’s view, prediction markets are a way to bet on the N.B.A. playoffs, the Texas Senate race or what Costco executives will say on their next earnings call.
They’re also often seen as a hive of insider trading, a view reinforced by charges filed on Wednesday against a Google employee who made more than $1 million on Polymarket. The case raises more questions about how these platforms are policed — and who should do the policing.
What happened: The Google employee, Michele Spagnuolo (who used the handle AlphaRaccoon), was accused of betting on what people were searching for on Google — wagers he was sure to win because he had access to internal search data.
“Spagnuolo correctly predicted virtually all of the outcomes on these positions,” the Commodity Futures Trading Commission wrote in its complaint.
A Google representative said in a statement that using confidential information for making these kinds of bets was “a serious breach of our policies.”
Spagnuolo isn’t the only person charged with insider trading on Polymarket. Federal prosecutors in Manhattan last month accused Master Sgt. Gannon Ken Van Dyke, a U.S. Special Forces soldier, of betting on the capture of Nicolás Maduro of Venezuela, an operation he participated in.
Insider trading is an increasing problem for prediction markets. Polymarket has faced significant scrutiny because its unregulated offshore platform has long made it easy to bet anonymously. (Kalshi, which is regulated in the U.S., has also suffered from insider trading.)
Polymarket has started clamping down on that practice, according to The Information — though some longtime users have chafed at those efforts. “Polymarket will go down the drain if they make KYC mandatory,” one user wrote on the company’s Discord discussion forum, referring to “know your customer” practices.
What are policymakers doing? Critics have accused the C.F.T.C., the primary American regulator of prediction markets, of failing to adequately police the industry. (Mike Selig, the commission’s chairman, told ABC News that his agency actively patrolled for wrongdoing.)
Some lawmakers are seeking to crack down on insider trading, including Representative James Comer, the Kentucky Republican who leads the House Oversight and Government Reform Committee, and several bipartisan groups of senators.
Why it matters: Prediction markets have become big businesses. (Kalshi was most recently valued at $22 billion.) But a growing perception that they’re rife with cheating could threaten their popularity.
HERE’S WHAT’S HAPPENING
The Trump administration is reportedly preparing to fund U.S. drone companies. Shares in Unusual Machines, a drone start-up in which Donald Trump Jr. is an investor and advisory board member, are soaring in premarket trading after The Wall Street Journal, citing unnamed sources, reported on the potential investments. (The Times hasn’t independently confirmed the report.) The deals, aimed at bolstering domestic production, are still in the negotiation stage — equity stakes are a possibility — as the Pentagon vets the companies, The Journal adds.
Investors brace for Thursday’s inflation data. The Personal Consumption Expenditures report for April, which will be closely watched by the Fed, is expected to show on Thursday that headline inflation hit a three-year high of 3.9 percent. The wartime energy spike is a big culprit, and that’s likely to tie the Fed’s hands on interest rates. Lisa Cook, a Fed governor whom President Trump has tried to fire, is the latest policymaker to say that there’s even a rate increase in the cards.
Jensen Huang reportedly agrees to join the board of a Chinese university. Huang, the Nvidia C.E.O., is expected to be the latest U.S. business leader to join the advisory board of Tsinghua University School of Economics and Management, The Financial Times reports. Tim Cook, Apple’s departing C.E.O., is the chairman, and Michael Dell and Elon Musk are members. (Nvidia is trying to jump-start business in China as the Washington-Beijing trade war continues.) Laura Loomer, a right-wing agitator, quickly seized on the Huang news, calling it “a massive scandal!!!!” on social media, and a national security risk.
What might Dimon buy?
Jamie Dimon, the C.E.O. of JPMorgan Chase, is sitting on a pile of cash and says he’s open to a deal. He even put a number on it: up to $20 billion.
While that’s not a big sum relative to the bank’s assets, it got us thinking: Where could JPMorgan, whose last major acquisition was First Republic during the 2023 regional-banking crisis, go fishing for a company to buy? Brian O’Keefe asked Mike Mayo, a banking analyst at Wells Fargo.
Here are three possibilities:
Wealth management. Driven by solid margins and lucrative high-net-worth customers, this area of finance has experienced an M.&A. boom in recent years. (The First Republic deal already bolstered JPMorgan’s wealth-advisory ranks.) Such a move would tick a lot of boxes, Mayo said, adding, “It could be a high-end private bank, it could be kind of a mass-affluent brokerage firm, it could be wealth advisory.”
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Mary Erdoes, who runs JPMorgan’s wealth management division, told analysts in February that her unit had reviewed 25 potential deals last year and passed on all of them.
Payments. JPMorgan has invested heavily in new payment platforms, including in JPM Coin, a digital token it has tested with Coinbase and Mastercard. The bank handles between $5 trillion and $10 trillion in transactions daily, Mayo said. “There could be more opportunities to enhance the efficiency, the effectiveness, the timeliness or the geographic reach in the payments area,” he added.
Digital banking. Dimon recently singled out Revolut, the British banking app that is plotting expansion into the U.S., as an emerging competitive threat. “To the extent that an acquisition could help JPMorgan become the next Revolut outside the United States, that would seem to be attractive,” Mayo noted.
There are some big asterisks to consider. Because of its size, JPMorgan would most likely be barred from buying another U.S. lender on antitrust grounds. For that reason, Mayo thinks that a deal, if there is one, would probably happen abroad.
Dimon himself is being coy. The bank may have amassed ample capital for acquisitions, but “it’s not burning a hole in our pocket at all,” Dimon said on Wednesday at an investor conference. “If it sits there for a while, no problem,” he added.
Dimon did not suggest any potential targets on Wednesday.
Here are some guesses:
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Aberdeen Group, Invesco or Julius Baer in wealth management?
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Revolut is too big, but how about Wise or Toast in payments?
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Or what about Monzo or Bunq, fintech banks that have grown rapidly in Europe?
Meta will charge for its chatbot
Meta will begin charging customers for access to its A.I.-powered chatbot, a big change for a company best known for its free products — and the latest sign that even deep-pocketed companies are wrestling with the enormous cost of artificial intelligence.
On Wednesday, we looked at how companies were reining in the costs of consuming A.I., including by switching to cheaper models. Meta’s move shows that the companies supplying A.I. models are also reckoning with ballooning costs, and seeking revenue to make up for those losses.
Meta is spending a fortune on A.I. Last month the company increased its 2026 capital expenditure forecast to as high as $145 billion, and Meta’s C.E.O., Mark Zuckerberg, said it would spend at least $600 billion on A.I. infrastructure in the next few years.
Some investors have looked skeptically on that plan. The company’s stock is down 2.3 percent this year.
Meta will use paid subscriptions to offset some of its A.I. investment. The basic tier of the chatbot, Meta One Plus, will be $7.99 per month. A premium version, Meta One Premium, will cost $19.99. From Bloomberg, which reported the subscription news earlier:
Meta has long argued that its A.I. investments are already paying off in the form of highly targeted and efficient advertising, which is improved thanks to A.I. models. But the company is also looking for other ways to recoup its A.I. spending, and consumer chatbot subscriptions have become popular with several other A.I. competitors, including Alphabet Inc.’s Google and OpenAI. Both rivals offer similarly priced subscription tiers.
The company has sought to expand its subscription business, testing plans for WhatsApp, Instagram and Facebook. It has also tried to cut costs in other corners of its business. This month, Meta laid off 10 percent of its employee base, about 8,000 workers.
Investors, eager to see revenue gains from A.I., cheered Meta’s subscription-chatbot plan. The company’s stock price was up 3.7 percent at the market close on Wednesday.
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Elsewhere, shares in the software maker Snowflake are soaring in premarket trading on Thursday after it reported strong quarterly results that suggested that A.I. agents weren’t clobbering its core subscription business. Salesforce’s analyst call on Wednesday, however, renewed fears that this sector was still vulnerable to A.I. disruption.
Quiz: U.F.C. on the South Lawn
This question comes from a recent Times article. Click an answer to see if you’re right. (The link will be free.)
President Trump is getting ready to celebrate his 80th birthday — and America’s 250th — with an evening of mixed martial arts. Preparations are underway to host Ultimate Fighting Championship matches in an octagon on the White House’s South Lawn on June 14. Construction of the temporary arena, along with a 90-foot-tall arch known as “The Claw,” featuring LED lights and audio equipment, began this week.
U.F.C. plans to spend around $60 million on the event, said Mark Shapiro, the president and chief operating officer of TKO Group Holdings, U.F.C.’s parent company, on a recent earnings call. (He added that U.F.C. would lose about $30 million on the event but that it would be “an investment for the long term.”)
The expenses include about $700,000 to repair the lawn after the fight, Dana White, the U.F.C. president and chief executive, told Sports Business Journal.
How many people will the temporary arena hold for the U.F.C. event at the White House?
THE SPEED READ
Deals
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“SpaceX-Tesla Merger Is ‘Only a Matter of When,’ Early Investor Says” (Bloomberg)
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Shares in the European food-delivery company Delivery Hero are down sharply on Thursday after Uber, which is pursuing a takeover bid for the company, raised its stake to nearly 37 percent. (WSJ)
Politics, policy and regulation
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The attorneys general of New York and New Jersey subpoenaed FIFA over soaring World Cup ticket prices. (WSJ)
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Gov. Gavin Newsom of California said he would impose a 100 percent tax on payouts to state residents from the $1.8 billion fund tied to the Justice Department’s settlement with President Trump. (Politico)
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