The just-announced trade “deal” (what’s the enforcement mechanism?) apparently covers pharmaceuticals. Where do we get most of our pharma (by value)? From Joey Politano, the answer:
Source: Politano.
I don’t think there’s anything on paper (and even if there were, would it mean much?).
So, not the 50% I pondered back in May, but still 15% is above 10%.
* To be clear, we do not know if Mr. Trump is taking a GLP-1.
** Back of the envelope calculation of tax increase. Effective tariff rate rises from 1.2% to 15%; 2024 imports from EU equals approx 600 bn. Assuming no price response (price elasticity is 0), and US as small country, this is a tax increase of $83bn/year, or $70 bn/year assuming a price elasticity of demand of unity.
This deal is similar to the one for Japan — and just as crazy.
For example finished EU cars can be imported with a 15% tariff. But US manufacturers have to pay 50% tariffs for steel and copper and 25% tariffs for the auto parts they get from Canada and Mexico.
It would be cheaper for US manufacturers to build their cars in the EU and ship them back to the US. Otherwise, it is likely that imported EU cars will be cheaper than US built cars.
US auto makers are livid. And US consumers are poorer. The Art of the Deal.
Off topic, but similarly stupid policymaking:
Last month, the Social Security Administration reported that the combined Trust Funds would be depleted in 2034, nine years from now:
https://www.ssa.gov/news/press/releases/2025/#2025-06-18
At that point, benefits will be reduced to 81% of what is promised. Since I expect I’m writing to a fairly well-off bunch, let’s use the maximum 2025 monthly benefit, $5,108, as an example. At 81%, you’d receive $4,137 per month (minus Medicare payments). Not bad, but that’s still a $971 reduction in payments each month. Over the course of a year, a reduction of $11,646, or $49,650 vs the full benefit of $61,296. (Pardon my rounding.)
If you aren’t among those who take in the top benefit, your situation might look more like this: A $3,000 monthly benefit reduces to $2,430 per month, so a reduction of $6,840 over the course of a year, or $29,160 vs $36,000. Keep in mind that for most retirees, Social Security benefits make up the majority of their income.
Now, that 19% reduction isn’t the end of it. At no point in the SSA’s 75-year forecast period does revenue exceed outlays, which means a steady further reduction in paid-out benefits after 2034. And every year that nothing is done to fully fund SS benefits, the problem gets harder to solve.
What’s Congress up to? Well, the House has taken an early recess to avoid talking about whether the felon-in-chief had sex with underage girls. Senate Republicans would like to join them, but the felon wants them to stay in Washington to confirm his judicial appointments. Which is to say, Congress is doing nothing about Social Security finances – again.
Well, that’s not strictly true. Congress has eliminated the double-dipping penalty on government retirement benefits, which worsens the finance of the Social Security Trust Fund. Otherwise, nothing.
Seniors are the most reliable voters in the U.S. They report being highly sensitive to threats to their government benefits, for obvious reasons. Any political party which made restoring Social Security finances an important goal would probably be rewarded at the polls. Typically, political “outs” take up the issues that the “ins” don’t want to deal with and make hay with them. So Congressional Democrats must be campaigning to save Social Security every day. Right?
What’s wrong with elected Democrats? Why aren’t they preaching from the pulpit about saving Social Security? Well, according to a recent news report, one Republican Congressman’s mail is running 500-to-1 Epstein to EVERY OTHER ISSUE, COMBINED! Yep, scandalous, prurient, kid-rapey stuff is what voters care about.
So “What’s wrong with elected Democrats?” is the wrong question. What’s wrong with us?
Anyhow, we ought to be pressing Congress to fix an obvious problem, with obvious solutions. Our economy benefits those at the top a whole lot more than everybody else. Change that just a little bit, and Social Security can pay what we promised. Do nothing, and everybody but those at the top is in for a much worse future.
I should have mentioned, the cut to benefits is off the top-line figure, before the Medicare premium is deducted. The Medicare premium probably won’t be adjusted lower when the Social Security benefit is reduced, so the net benefit, the deposit to recipients’ bank accounts, will be reduced by more than 19% in 2034.
And in subsequent years, by more than 20%, 21%, 22%…
Tom Lehrer, mathematician and melodic cultural commentator, has died at age 97. Lehrer received his PhD in math…wait, sorry no…never finished his dissertation after 16 years of trying, from Harvard University. In addition to teaching math a Harvard, MIT, UC Santa Cruz (where he also taught musical theater) and Wellesley, Lehrer may have worked for the Los Alamos Lab (couldn’t talk about it) and the NSA (couldn’t talk about it).
Among his many contributions to our culture are “Poisoning Pigeons in the Park”, “National Brotherhood Week”, “Werner von Braun”, “New Math” and Jello shots. His work has been banned by the BBC, denounced by Time Magazine, covered up by the U.S. national security apparatus and praised by Isaac Asimov as the best time he ever had at a night club – probably referring in particular to “I Got It from Agnes”.
He was not the first of his kind, but in his time and maybe for all time, he was the best. R.I.P.
Research suggests the problem isn’t just that the U.S. lacks capacity — it’s that the country isn’t leveraging its existing footprint. Results from a survey of nearly 40 generic drug manufacturing sites published in 2022 by Anthony Sardella, the founder and chair of APIIC, showed about half of all production capacity was going unused.
…
“Underutilization of manufacturing capacity equates to an astonishing 30 billion doses of medicines that could be made here, by existing manufacturers in existing facilities,” APIIC wrote.
https://www.pharmavoice.com/news/trump-tariffs-china-generic-drug-manufacturing-reshore/734785/
Maybe onshoring medicines is not only a strategically good idea, it is something that doesn’t require much new capacity.
https://medicalextrusion.com/what-is-onshoring/
Trump and DOGE are turning their sights on the Federal Reserve. They’ve gone full on creationist on the meddling economic scientists.
Bessent: “What we need to do is examine the entire Federal Reserve institution and whether they have been successful. All these PhDs over there, I don’t know what they do. This is like universal basic income for academic economists.”
Hey, hey, all you economists are welfare leeches. Universal basic income for academics? He thinks the Fed is the Hoover Institution.
Warsh: “There’s plenty of deadwood at the central bank.”
And one of the instruments of their destruction is Michelle Bowman, appointed to the board of governors by Trump, who is not tainted by any economic science but instead has a BA in advertising and law degree from a school in Topeka. She is currently working diligently to roll back those pesky bank capital requirements and leverage limits.
You know the famous “first they came for the socialists and I did not speak out because I was not a socialist, etc, etc.” Well, now they are coming for you.
Even the libertarians are starting to get the idea that Trump’s demented trade war is not good for “free markets” and will lead to a loss of American manufacturing jobs – (subjecting U.S.-based auto manufacturing to a 50% steel/ aluminum tariff and a 25% tariff on Canada/Mexico auto parts while the finished auto imported from Japan is paying a 15% tariff) https://reason.com/2025/07/23/trumps-deal-with-japan-is-another-loser-for-americans/
You’ve already made this argument. It was already answered. You have ignored that answer here, which is dishonest.
Just as a reminder, batching of production – running each batch through every step of the production process while other steps remain idle – accounts for much of the low capacity use rate in drug manufacture. Tariffs won’t fix that.
Not that you’ll ever take the high road and address facts, but here’s another ine you need to address. Drug makers apparently don’t seek production efficiency to the extent other manufacturers do:
https://www.pharmasalmanac.com/articles/solving-the-industrys-capacity-utilization-problem
That happens sometimes in firms that don’t face competition.
Let us know when you figure outsome way that tariffs can overcome issues like these. ‘Cause so far, all you have is one article, written by what is essentially a lobbying group, that you’re trying to sneak in here a second time.
Just to clarify, this was meant for Brucie’s lame effort at excusing tariffs. Lame and repetitive.