Peter Navarro, Trump's Top Trade Advisor, Speaks To Reporters After Shock PPI Report

Forbes Breaking News

5 months ago

Peter Navarro, President Trump's top trade advisor, speaks to reporters outside the White House.

Transcript

00:00PPI. Hang on. I've got a mission here. What I want to talk about at some length is the

00:10pharmaceutical executive order that was signed yesterday by President Trump. After I get through

00:16that, happy to take any questions on that and then happy to talk a little bit about the PPI.

00:22So let's stay focused on Big Pharma. The reality here, the top line is that Americans' medicine

00:30cabinets can't be dependent on foreign imports. We know that there's big supply chain resilience

00:39issues there. And so what this executive order yesterday does is address this problem in three

00:49different ways. The top line here is we're creating a strategic advanced pharmaceutical

00:55ingredient reserve. We're number one. Number two, we are trying to stabilize long-term demand

01:04through long-term contracts from the government, which is the biggest buyer of pharmaceuticals.

01:11And three, ala the broader issue of regulatory reform, we are going to make it much easier

01:19for advanced manufacturing, continuous manufacturing, to occur here and make us competitive. So that's

01:28kind of the thrust of the EO. Now, here's the back story for the American people. You have

01:34a process which goes in three stages. You have precursor chemicals, which are then turned into

01:44what's called advanced pharmaceutical ingredients. And these advanced pharmaceutical ingredients

01:48are then mixed and made into the finished dosage form of the medicines that you get liquids,

01:55tablets, capsules, and everything in between. And historically, what we've had is a problem

02:04where because of the dumping and unfair trade practices of foreign countries, we have not been

02:14good at the precursor chemicals or the API. In other words, the first two stages of the three stages

02:22that we need. As a practical matter, about 60 percent of our API is made in China and India. And India

02:34gets most of its precursor chemicals from China. So that's the textbook definition of strategic

02:41vulnerability. I encountered this in the first term with President Trump during the pandemic. I was what

02:48was called the Defense Production Act policy coordinator. It was my role to go out and get as quickly as

02:55possible as possible, the kind of PPE we needed. Had companies like Abbott come to me and say in order to

03:04make their test kits for the virus, they needed certain chemical reagents. I had to get that. And we learned

03:11after China threatened to drown us in a sea of coronavirus that we had significant vulnerabilities. The

03:20president signed an order which I urge you to look at from the first term. It was drafted in my office,

03:27the Office of Trade Manufacturing Policy in that first term that basically started us down the path we're on

03:34now today of mapping out all the critical medicines and things we need in order to keep Americans healthy. But

03:45when Biden took over, they let that ball drop. And we are in a situation now where we have to secure

03:55our pharmaceutical supply chains. So we take a three pronged approach to this. Follow me closely here.

04:02Creating this strategic API reserve, the SAPR, right? We are going to do that. We're going to need a little

04:10extra help from Congress, which we're encouraging them to help fund this. Generically, we have no pun

04:17intended there. We have a problem where we need all sorts of stockpiles, whether critical minerals,

04:23pharmaceuticals, whatever. And for whatever reason, the agencies don't get that. But we need to have that

04:31with six months of reserves. We need to be able to rotate stocks so everything stays fresh. So we're going to

04:38get that done. Secondly, as I spoke a little earlier,

04:46when foreigners dump products into our market, it makes it uneconomic for our domestic manufacturers to

04:57exist. And it's predatory pricing, particularly on the part of China. They have actually identified

05:05sectors like pharmaceuticals. They want us out of business here so that they can have their way with

05:12us and the world, essentially. So the way we're going to address that is to have the country's largest

05:22group of medicine buyers, which is the federal government, in the form of Health and Human Services,

05:29Veterans Administration and Department of Defense. They'll be issuing long-term multi-year contracts

05:38for these critical medicines that we need so that producers have assurances that if they make the kind

05:47of investments that need to be made, that they will be rewarded with demand from the government. So that

05:55will stabilize that. Then third, again, during the first term, I got fairly active,

06:06good pun there, fairly active in advanced manufacturing for active pharmaceutical

06:11ingredients. And we were able to stand up some plants and get that moving along.

06:16But as always, one of the problems we have in America when we try to meet our needs is that there's

06:24regulatory problems and delays, and we just have to get that stuff out of the way. So we're going to

06:32hit this with a three-pronged approach. Now, as I'm speaking, the Department of Commerce

06:39is also working on a Section 232 action on pharmaceuticals. And if, as is almost certain

06:50to be the case, the Department of Commerce finds that the flood of imports of pharmaceuticals into

06:58this country are indeed a national security threat, there will be tariffs. So today's EO coupled

07:06with tariffs will provide everything the private sector needs in order to bring home our pharmaceutical

07:18manufacturing. So this is a good day for America. America first, America pharmacies first,

07:25and that's where we're at. So I'll stop there and take some questions. Let's do pharma first,

07:31okay? Give me the courtesy of that. And then when you're done with those questions, I'll take one or

07:38two on the PPI. Let me ask you about those tariffs that you just outlined.

07:42Sure. So would those sectoral tariffs be across the board in the sense that the tariff rates

07:48would be the same for all? Yeah, let me just stop you there.

07:50Or would it be country by country? Let me stop you there.

07:52That's a work in progress. It's all contingent on the investigation and all will be revealed

08:04when the investigation comes. As a rule, the way to think about this as journalists is the 301 actions

08:13by the USTR are generally, but not always country specific, whereas the 232s are product specific.

08:24Okay? What else you got? Yes, sir.

08:26Would it distinguish between generic pharmaceutical drugs and the patented or new high-end drugs?

08:32The heavy, good question, the heavy focus is on the generics. The problem, the problem we have,

08:37the problem we have with generics is that they are generics and they have very, very low margins to make

08:47money on. So we tend dramatically to underproduce them here, whereas the patented ones, they have big

08:55margins and therefore more room to run here in the United States. Yes, sir.

09:01I just wanted to ask, you talked about incentivizing manufacturers for the pharmaceutical industry to

09:07make things here. But to use that same model for the president's broader tariffs, he wants the tariffs,

09:13he wants U.S. manufacturing as a whole to come back to the state. But with the next administration,

09:19if those tariffs go away, isn't that incentive automatically gone? And then don't those jobs just

09:25instantly? Did I hear a reporter in the pool actively advocating for a Republican president

09:34after 28? Is that what I hear, sir? Yeah, but that's the point. That's why you vote for Republicans.

09:42We bring jobs home and we will provide stability to your medicine cabinet, to your automobile industry,

09:49and everything in between. So yes, we recognize that problem.

09:52I think one thing we learned, which I'll say in seriousness, is that the China 301 tariffs were

10:02so effective during Donald Trump's first term that the Biden administration kept them in place.

10:12It weakened them, but it kept them in place. I think who's ever in this House

10:17in January of 2029, and I hope and pray for this country that's a Republican,

10:28they will see that President Trump's tariff policies and strategies have totally transformed

10:36the manufacturing landscape here in the United States at the same time that they're providing

10:44literally trillions of dollars in order to give us tax cuts, pay for paying down our debt and everything

10:52in between. So yes, it'd be nice if we had 100% certainty, sir, but that's not where we're at.

11:00You've been patient here. We'll go here and then here.

11:03What's your takeaway from this PPI?

11:04Sir, come on. You're violating the rule here, right? We're talking pharma. Yes, ma'am.

11:10You outlined the long-term role of these, but in the short-term, concerns about increased costs for

11:18patients. What do you say to patients who are concerned that the pharmaceutical costs might rise

11:23as a result of these tariffs, and is there anything that the administration is planning to

11:27or could do to incentivize pharmaceutical companies from not passing the law across?

11:32Well, look, the costs that you say, that's the rap we always hear, but we don't see that

11:43in the data. We didn't see it in the first term. So we can cross that bridge when we come to it.

11:48But I will say one of the things that President Trump is angry about, I think that's the right

11:56word, is the fact that big pharma uses the United States basically as its golden goose. It engages in

12:07what's called cross-subsidization across global markets. And because of our status in terms of

12:14income levels and how price elasticities work, we pay higher prices for drugs than foreigners in other

12:24countries do where incomes are lower. That's just, that's just wrong. I mean, we're not here to make

12:30money for big pharma. We're here to protect the American people. All right. Yes. How's Mike doing?

12:39He's doing very well. Thank you so much. How can I help you? My question on the pharma initiative,

12:43how many American jobs specifically do you guys have any information on how much that will create?

12:47I'm going to leave that up to our Council of Economic Advisors. But what we're doing here is creating

12:56trillions of dollars of investment and millions of jobs. We'll get a good chunk of that. I think that

13:05this whole continuous advanced manufacturing revolution that this will help move forward

13:11will be be a great thing for America. But the big beneficiary here is going to be Americans who need

13:20medicines in this question earlier about what do you tell Americans about price? Look,

13:28if you can't get the medicines you need because foreigners are controlling that and using it to try

13:35to blackmail America, that's, that's an untenable situation. All right. Any more pharma questions?

13:42Anyone? All right. What, uh, what would you like to say, Mr. Impatient News Nation?

13:48Just wondering if you're taking away from that PPI. Sure. Uh, just, just briefly, uh, look,

13:55if you look at it, uh, this is the kind of thing I used to do in my, my previous life,

14:01um, wrote textbooks on economic indicators and things like that. What, um, what you want to

14:09see is whether the PPI numbers will move to the CPI, the consumer price index, which is not always the

14:18case at all. We also know that the PPI is highly volatile. Uh, we also know there's going to be,

14:25some people are going to try to make it a tariff story. But if you peer beneath the hood

14:31of the numbers, uh, there's nothing in there to suggest that tariffs were responsible for,

14:39uh, a number that was above estimates. So this is clearly a case where you just watch the data now

14:47and you watch it, uh, really carefully. Um, and as the boss says, let's see what happens. All right.

14:54Thank you for being with you today. What is it causing the, the PPI to go up?

14:59Is the administration left here? Thank you, sir.

Peter Navarro, Trump's Top Trade Advisor, Speaks To Reporters After Shock PPI Report

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