Trump signs order aiming to cut some U.S. drug prices to match lower ones abroad

Economic

Summary:

President Donald Trump revived a controversial policy that aims to slash drug costs by tying the prices of some medicine in the U.S. to the significantly lower ones abroad.The order is a blow to the pharmaceutical industry, which is already bracing for Trump’s planned tariffs on prescription drugs.It is Trump’s latest effort to try to rein in U.S. prescription drug prices, which are two to three times higher on average than those in other developed nations.

President Donald Trump on Monday revived a controversial policy that aims to slash drug costs by tying the prices of some medicine in the U.S. to the significantly lower ones abroad.

Trump signed an executive order including several different actions to renew that effort, known as the “most favored nation” policy. He did not refer to specific nations, but signaled that he would target other developed countries because “there are some countries that need some additional help, and that’s fine.”

“Basically, what we’re doing is equalizing,” Trump said during a press event on Monday. “We are going to pay the lowest price there is in the world. We will get whoever is paying the lowest price, that’s the price that we’re going to get.”

White House officials did not disclose which medications the order will apply to, but said it will impact the commercial market as well as Medicare and Medicaid. They said Monday’s announcement will be broader than a similar policy that Trump tried to push during his first term, which only applied to Medicare Part B drugs.

Officials added that the administration will have a particular focus on drugs that have the “largest disparities and largest expenditures,” which could include popular weight loss and diabetes treatments called GLP-1 drugs.

It’s unclear how effective the policy will be at lowering costs for patients. In a social media post on Monday, Trump claimed drug prices will be cut by “59%, PLUS!”

But Trump during the press event claimed drug prices may fall even more, between 59% and 80%, or “I guess even 90%.”

Shares of U.S. drugmakers rose Monday. Merck’s stock added more than 4%, while Pfizer and Amgen climbed more than 2%

How Trump’s drug pricing order will work

Part of the order takes aim at nations abroad, which have more power to negotiate down drug prices with pharmaceutical companies.

"Starting today, the United States will no longer subsidize the health care of foreign countries, which is what we were doing," Trump said, adding the U.S. "will no longer tolerate profiteering and price gouging from Big Pharma."

He added that "it was really the countries that forced Big Pharma to do things that, frankly, I'm not sure they really felt comfortable doing."

The order directs the Office of the U.S. Trade Representative and the Department of Commerce to crack down on "unreasonable and discriminatory policies" in foreign countries that "suppress" drug prices abroad, the officials said.

"We are going to be working to make sure that countries aren't being unfair in their negotiations with pharmaceutical companies, right?" one official said. Drugmakers are "constantly complaining" about being put "in an untenable situation when in these negotiations" because those companies typically have to broker drug discounts with entire countries, the official added.

Unlike the U.S., several foreign countries offer universal health coverage where the government is the sole payer, giving it significant leverage to negotiate or set drug prices.

White House officials said they expect drugmakers to provide discounts across the board to "reciprocate" the actions the Trump administration is taking to address prices abroad.

Trump's order also directs the secretary of the Department of Health and Human Services to establish a pathway for U.S. patients to buy their drugs directly from manufacturers at "most favored nation" prices, bypassing middlemen.

"We're going to cut out the middlemen and facilitate the direct sale of drugs at the most favorite nation price, directly to the American citizen," Trump said.

Within 30 days, the secretary will also have to set clear targets for price reductions across all markets in the U.S., according to the officials. That will open up a round of negotiations between HHS and the pharmaceutical industry, officials said, not providing exact details on the nature of those talks.

If "adequate progress" is not made towards those price targets, HHS Secretary Robert F. Kennedy Jr. will impose the most favored nation pricing on drugs through rulemaking.

The order also directs the Food and Drug Administration to consider expanding imports from other developed nations beyond Canada. Trump signed a separate executive order in April directing the Food and Drug Administration to improve the process by which states can apply to import lower-cost drugs from Canada, among other actions intended to lower drug prices.

Monday's order also directs the Department of Justice and Federal Trade Commission to aggressively enforce "anti-competitive actions" that keep prices high in the U.S.

The Department of Commerce will also consider export restrictions that "fuel and enable that low pricing abroad."

It is Trump's latest effort to try to rein in U.S. prescription drug prices, which are two to three times higher on average than those in other developed nations – and up to 10 times more than in certain countries, according to the Rand Corporation, a public policy think tank.

The order is a blow to the pharmaceutical industry, which is already bracing for Trump's planned tariffs on prescription drugs. Drugmakers have argued that the "most favored nation" policy would hurt their profits and ultimately, their ability to research and develop new medicines.

White House officials contended that pharmaceutical companies will continue to make money after the price cuts if they realize that the U.S. "alone is not going to pay for innovation" and if they increase prices abroad to get additional revenues there.

Drugmakers "should pursue deals where they get financially rewarded commensurate the value that they are providing to other nations, health systems," one official said.

"Other countries should pay research and development too. It's for their benefit," Trump added on Monday.

The policy could help patients by lowering prescription medication costs, which is an issue top of mind for many Americans. More than three in four adults in the U.S. say the cost of medications is unaffordable, according to a KFF poll from 2022.

The industry also lobbied against similar Trump plans during his first term. He tried to push the policy through in the final months of that term, but a federal judge halted the effort following a lawsuit from the pharmaceutical industry. The Biden administration then rescinded that policy.

White House officials initially pressed congressional Republicans to include a "most favored nation" provision in the major reconciliation bill they plan to pass in the coming months, but the policy would have specifically targeted Medicaid drug costs, Politico reported earlier this month. Several GOP members opposed that measure.

The effects on patients, companies

The industry's largest trade group, PhRMA, estimated that Trump's Medicaid proposal could cost drugmakers as much as $1 trillion over a decade.

Some health policy experts have said a "most favored nation" drug policy may not be effective at lowering medication costs.

For example, USC experts said the policy "can't undo the basic economics of the global drug marketplace," where 70% of pharmaceutical profits worldwide come from the U.S.

"Facing a choice between deep cuts in their U.S. pricing or the loss of weakly profitable overseas markets, we can expect many firms to pull out from overseas markets at their earliest opportunity," experts said in a report in April.

That will leave Americans paying the same amount for medications, drugmakers with lower profits and future generations of patients with less innovation, they said.

"In sum, everyone loses," the experts said.

Other experts have said another legal fight with the pharmaceutical industry could prevent the policy from taking effect.

But even if the drug industry pushes back on Trump's executive order, his administration still has another tool to push down drug prices: Medicare drug price negotiations.

It's a key provision of the Inflation Reduction Act that gives Medicare the power to negotiate certain prescription drug prices with manufacturers for the first time in history.

Trump last month proposed a change to that policy that drugmakers have long sought. Lawmakers on both sides of the aisle could be receptive to the idea, which proposes changing rules that differentiate between small-molecule drugs and biologic medicines.

Trump last week said he plans to announce tariffs on medicines imported into the U.S. within the next two weeks. Those planned levies aim to boost domestic drug manufacturing.

Drugmakers, including Eli Lilly and Pfizer, are pushing back on those potential duties. Some companies have questioned whether the tariffs are necessary, given that several of them have already announced new U.S. manufacturing and research and development investments since Trump took office.

Still, Trump last week doubled down on efforts to reshore drug manufacturing. He signed an executive order that streamlines the path for drugmakers to build new production sites.

Caplan noted that even if the drug industry pushes back on the executive order, the administration still has another tool at its disposal: Medicare drug pricing negotiations.

Source:CNBC

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Blue River

Forex

Technical Analysis

USDCAD stretches to 1.4000. 200 day MA eyed

The USDCAD has extended its gains and pushed above the key 1.4000 level, reaching a high of 1.40043. The next upside target comes in at the 200-day moving average at 1.40106, followed by resistance at 1.40268, a prior swing area high. Beyond that, the 38.2% retracement of the decline from the March 2025 high sits at 1.40525, marking a more significant hurdle for buyers.

The earlier dip in price found support at 1.3977, the April 15 swing high, where buyers leaned in and reasserted control. That successful retest reinforced the bullish bias and helped fuel the move back toward and through 1.4000.

While the break above 1.4000 is constructive, buyers still have work to do. A sustained move above the 200-day moving average, and ultimately the 1.40525 retracement level, is needed to confirm a stronger upside shift. For now, momentum remains with the buyers.

Source: ForexLive

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Adam

Economic

China–U.S. Trade War

President Donald Trump's trade war truce with China still leaves a hefty 30% tariff in place, at least for the time being.

On Monday, the White House announced that the U.S. and China had agreed to lower trade barriers with one another, simmering down a trade war that had exploded last month. The U.S. will pause the harshest tariffs for 90 days, while leaving a 10% "baseline" tariff in place, along with a 20% tariff that Trump said was to push China to crack down on fentanyl smuggling to the U.S. Tariffs of 25% remain on certain products including steel, aluminum, and automobiles.

Although the trade deal announced Monday was a significant reduction and raised hopes that negotiations could further reduce import taxes, tariffs are still far higher than they were before Trump started raising them.

The effective tariff rate on all U.S. imports after the tariff announcement is 15%, down from 24%, Abigail Watt, an economist with UBS, estimated in a commentary. Before Trump took office for the second time, the average tariff rate was 3%, according to an estimate by the Peterson Institute for International Economics.

Economists predict merchants will pass those import taxes on to consumers, meaning the tariffs could push up the cost of living and risk reigniting high inflation. Lowering the tariffs reduces those risks, economists said.

"The outcome of the U.S./China talks this weekend seem to take us back to pre-'Liberation Day' levels," Jim Reid, research strategist at Deutsche Bank, wrote in a commentary. "Increasingly, it’s as if the last six weeks have been a bad dream and never actually happened."

Dialing back the trade wars could help the economy on several fronts.

"This helps the economy in the short run," Jon Hilsenrath, senior advisor at StoneX, wrote in a commentary. "Tariffs squeeze corporate profit margins, so reducing them will help boost profits and stock values. Households will see their 401(k) retirement plans improve, which could help consumption. It also reduces the risk of consumer price inflation and shortages on store shelves. It will relieve some anxiety at the Federal Reserve about inflation; it could help to hold down interest rates. That's all good news."

Source: investopedia

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Adam

Commodity

CL/WTI Technical Analysis

The light sweet crude oil market has rallied rather significantly during the session here on Monday as we have reacted to the announcement over the weekend that the United States and China have cut tariffs quite drastically, with a 90-day ceasefire as it were between the two countries in order to work out a deal.

This does bode well for the idea of global trade, which, of course, bodes well for the idea of crude oil rallying. Ultimately, as long as the market continues to see hope. I think it’s only a matter of time before we bottom here and oil really starts to take off. The $65 level though, needs to be overcome for the next leg higher. In the short term, I think pullbacks continue to offer buying opportunities, with a special focus on the $60 level.

Brent Technical Analysis

Brent markets, of course, have rallied significantly as well, with the 50-day EMA sitting right around the $67 level being a potential target. We, of course, are rallying here just as we are in the light sweet crude oil market, and therefore, I think the analysis is very similar. We’re looking for short-term pullbacks as buying opportunities in a market that quite frankly probably is in the process of forming a longer-term bottom.

The $60 level below I think is a major support level as well. So, with that being said, I like the idea of buying Brent on dips. And if we can clear the $70 level, it’s likely that Brent will take off to the upside.

source :fxempire

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Adam

Commodity

Gold prices are sharply down and silver futures prices also lower in early U.S. trading Monday. Risk appetite has returned to the marketplace after the weekend news that the world’s two largest economies are seeing a significant thawing in their cold war on trade. June gold was last down $121.50 at $3,222.50. July silver prices were last down $0.469 at $32.445.

Risk appetite is keen to start the trading week following the weekend news that the U.S. and China are working on better trade relations. Most tariffs were slashed on each other’s goods for a period of 90 days. The 90-day accord signals a notable de-escalation in the ongoing trade conflict between the two economic superpowers. The deal was announced after high-level negotiations in Geneva, Switzerland, and is seen as a crucial step toward stabilizing global markets and restoring business confidence. Joint statement: “After taking the aforementioned actions, the parties will establish a mechanism to continue discussions about economic and trade relations,” the joint statement said, adding this dialogue would be led by Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer.

Asian and European stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed to sharply higher openings today in New York.

The key outside markets today see the U.S. dollar index sharply higher and at a four-week high. Nymex crude oil futures prices are sharply higher and trading around $63.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.457%.

U.S. economic data due for release Monday includes the USDA monthly supply and demand report, and the U.S. Treasury monthly budget statement.

Gold price plummets as U.S.-China trade relations thawing_1

Technically, June gold futures bulls have lost their overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $3,350.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,200.00. First resistance is seen at $3,250.00 and then at $3,275.00. First support is seen at the May low of $3,209.40 and then at $3,200.00. Wyckoff's Market Rating: 5.0.

Gold price plummets as U.S.-China trade relations thawing_2

July silver futures bulls have the slight overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $34.015. The next downside price objective for the bears is closing prices below solid support at $31.00. First resistance is seen at $33.00 and then at the overnight high of $33.20. Next support is seen at $32.00 and then at last week’s low of $31.86. Wyckoff's Market Rating: 5.5.

Source: kitco

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Damon

Economic

The tariff agreement, which was the result of negotiations in Switzerland between Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, and a Chinese delegation, will decrease the current 145% US tariffs on most Chinese imports to 30%. This includes the rate associated with fentanyl and is expected to be implemented by May 14. Additionally, the 125% Chinese duties on US goods will be cut down to 10%.

This three-month reduction of import duties will provide both countries with an opportunity to negotiate a wider trade agreement. The tariff reductions, however, will not be applicable to sectoral duties imposed on all US trading partners or to tariffs imposed on China during the first Trump administration.

In addition to the tariff adjustments, Trump stated that China agreed to "suspend and remove all of its non-monetary barriers." He further commented, "They’ve agreed to open China, fully open China. And I think it’s going to be fantastic for China. I think it’s going to be fantastic for us, and I think it’s going to be great for unification and peace. China will also suspend and remove all of its non monetary barriers, and they’ve agreed to do that."

Following these developments in trade talks, Wall Street saw significant gains, with the S&P 500 increasing about 2.5%.

Source: Investing

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Warren Takunda

China–U.S. Trade War

The S&P 500 hit its highest since early March on Monday as a crucial U.S.-China agreement to slash tariffs put investors worldwide at ease after weeks of uncertainty around the future of global trade.

The Dow Jones Industrial Average rose 2.51% to an over one-month peak at 09:45 a.m. ET, while the Nasdaq Composite gained 3.34% to its highest in more than two months. The S&P 500 advanced 2.53%, surpassing its 200-day moving average for the first time since late March.

The U.S. will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%, the two countries said on Monday. The new measures are effective for 90 days.

Most megacaps jumped, with Nvidia rising 4% and Tesla adding 4.7%. An index of semiconductor stocks also leapt 5.9% to an over two-month high.

Apple shares rose 4.9% after a report said the company was considering raising the prices of its fall iPhone lineup. The stock was last up 6.2%.

"The market has to re-calibrate to what things look like before 'Liberation Day' and that looks like a very constructive growing economy," said Thomas Hayes, chairman at Great Hill Capital LLC.

President Donald Trump's April 2 tariff announcements, dubbed "Liberation Day", had raised fears of a global recession and forced many businesses to put big spending decisions on hold.

Since then, however, upbeat earnings reports, Trump's softening stance on tariffs and a U.S.-UK limited trade agreement have helped both the S&P 500 and the tech-heavy Nasdaq erase all losses incurred following April 2. The blue-chip Dow has recouped nearly all its declines too.

Wall Street's "fear gauge," the CBOE Volatility Index, retreated to 19.19 on Monday – a level last observed before the tariff turmoil in April.

All 11 S&P 500 sub-sectors were trading in positive territory on the day, with consumer discretionary leading gains with a 5.2% jump.

Crude oil prices also surged close to 4% after the U.S.-China announcement, lifting shares of top producers Chevron and Exxon Mobil over 2% each.

"You (will) have a bunch of forced buyers that are going to be in the market playing catch up," said Great Hill Capital's Hayes. .

Retail giant Walmart , network equipment maker Cisco and farm equipment maker Deere are among the prominent companies set to report results this week.

Several Federal Reserve officials, including Chair Jerome Powell, are also slated to make public remarks over the week.

Traders expect the Fed to deliver two 25-basis-point rate cuts by the end of 2025, compared with three cuts seen at the start of May, according to data compiled by LSEG.

Advancing issues outnumbered decliners by a 4.83-to-1 ratio on the NYSE and by a 4.34-to-1 ratio on the Nasdaq.

The S&P 500 posted 12 new 52-week highs and two new low while the Nasdaq Composite recorded 63 new highs and 14 new lows.