Good morning! President Trump gave a wide-ranging interview Tuesday morning, though his comments on the healthcare and pharma industry caught my attention. He plans to impose hefty levies on the space, which could very well drag down a sector that’s already dragging its feet.

Big pharma, big tariffs

President Trump’s latest tariff threat has targeted a sector that’s already hobbled. 

On Tuesday, Trump told CNBC he plans to impose levies of up to 250% on imported pharmaceuticals, a jump from the 200% figure he floated in July.

While no action has rolled out yet, pharma stocks dipped on the news, adding pressure to what’s already been a historically bad stretch for healthcare investors.

Novo Nordisk has dropped 46% in 2025, while Pfizer and Eli Lilly are lagging the S&P 500.

Gilead is the only major drugmaker ahead of the benchmark year-to-date, while the rest of the sector has stalled.

The current setup resembles a “sequel to the purge movies,” said Todd Sohn, technical strategist at Strategas Securities.

Nearly $26 billion has exited healthcare ETFs since early 2023, making it one of the few sectors facing sustained outflows in a rising market.

Trump’s latest threat injects new uncertainty.

The proposed tariffs follow his push to revive the “most favored nation” status for the US and his campaign to pressure drugmakers to slash prices.  

All that leaves pharma stocks in a perfect storm of declining sentiment, policy pressure, and now a potential trade war. 

But the risks go beyond Washington. High interest rates have weighed on pharmaceuticals’ business model all year.

The industry relies on multi-year R&D timelines and capital-intensive manufacturing, making it particularly vulnerable to higher financing costs. 

With Jerome Powell and the Fed hesitant to cut rates, that’s eroded margins and investment appetite for Big Pharma.

Meanwhile, structural shifts in the market have also undermined the health sector.

Data from Strategas shows passive flows have rotated into cash, crypto, and cyclical ETFs and out of defensives such as healthcare. 

Concentration risk exacerbates the issue.

The 10 largest S&P 500 stocks now make up roughly 40% of the index, leaving little room for the beaten-down corner of the market to gain traction.  

The Morningstar Healthcare Index is down about 3.4% year-to-date, while its drug manufacturing index is roughly flat on the year.

Market snapshot

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Elsewhere

🏦Scott Bessent won’t be the Fed Chair. President Trump said he has ruled out the Treasury Secretary from the running, and that Bessent told him he doesn’t want that job: “I love Scott, but he wants to say where he is.” (Politico)

📉 Markets are punishing negative earnings surprises more than usual. Companies that reported weaker-than-expected quarterly results have seen an average stock drop of 5.6% the two days before through two days after the release. That’s larger than the typical -2.4% move. (FactSet)

🚢 The US trade gap has narrowed to a 2-year low. President Trump’s tariffs caused a sharp drop in consumer goods imports in June, and activity has slowed in the services sector. Meanwhile, tariffs have shrank the trade gap with China to its lowest in 21 years. (Reuters)

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One stock just surged 15% on Tuesday — and it’s up 40% since we told our members about it four months ago.

Rapid-fire

• Wall Street’s hoping a US-China trade deal happens before the August 12 deadline (Barron’s)

• Retail investors are bullish but they have pulled back compared to previous market peaks (Axios)

• President Trump says JPMorgan and Bank of America refused his business (Yahoo Finance)

• Shares of digital insurance stock Lemonade climbed 28% after blowout earnings (StockStory)

• Diesel prices at the pump are hovering at the highest level in a year (Bloomberg)

• Skyrocketing global debt and interest payments will be like rocket fuel for asset prices (Pomp Letter)

• Two major Wall Street banks still expect zero rate cuts in 2025 (Opening Bell Daily)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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