Marketplace Morning Report: Could Tariffs Help Reshore US Drug Manufacturing?

Release Date: July 21, 2025

In this episode of Marketplace Morning Report, host David Brancaccio delves into a range of pressing economic and business topics, culminating in an in-depth discussion on the potential impact of tariffs on reshoring U.S. drug manufacturing. Below is a comprehensive summary of the key points, insights, and conclusions drawn from the episode.

1. Chevron's Acquisition of Hess Corporation

[01:00] David Brancaccio opens the episode with significant news from the energy sector: Chevron's acquisition of Hess Corporation, a notable player in fossil fuels. This move marks Chevron's strategic expansion into vital oil fields located off the coast of Guyana.

Henry Epp provides context on the significance of this acquisition:

"Oil off the coast of Guyana was first discovered in 2015, and it's the kind of resource oil companies just don't come across that often anymore." [01:27]

David Goldwyn, President of Goldwyn Global Strategies, explains the strategic advantage of these oil reserves:

"It's a large basin, and once you stick that straw in it, even if it's sort of a mile down, you can continue to drain it at a pretty steady rate for probably 20 years... which is a lot cheaper than getting crude from one of the last big discoveries like fracked shale oil in the Permian Basin." [01:27]

Matt Smith, an analyst with Kepler, highlights the quality of the crude oil:

"It's a medium to light crude oil... very attractive, especially in Europe, which has been trying to cut down imports of similar types of crude from Russia since the invasion of Ukraine." [02:10]

The acquisition not only consolidates Chevron's position in a lucrative oil region but also has broader implications for global energy markets, particularly in the context of Europe's search for alternative energy sources post-Russia-Ukraine conflict.

2. Changes in the S&P 500 Index

Transitioning from the energy sector, Brancaccio addresses the implications of Chevron's acquisition on the S&P 500 index.

• Hess Oil's Integration into Chevron: With Hess being absorbed by Chevron, Hess will no longer be a separate entity within the S&P 500. This creates an open slot in the index.

• Block’s Inclusion: The vacant position will be filled by Block, formerly known as Square, a leading mobile payments company. This transition reflects the dynamic nature of the S&P 500, continuously evolving with market leaders.

"Starting on Wednesday, S&P and Nasdaq futures are both up 3.10%." [02:42]

This shift underscores the growing influence of fintech companies in the broader economic landscape and signals investor confidence in digital payment platforms.

3. Departure of Erica Williams from the Public Company Accounting Oversight Board (PCAOB)

[03:28] Brancaccio shifts focus to regulatory oversight, highlighting the resignation of Erica Williams from the PCAOB.

Nancy Marshall Genser provides an overview of PCAOB's role:

"This board was created by Congress in 2002 to oversee accounting firms that audit public companies... The idea is to protect investors so they can have faith in the financial statements of the companies they're putting their money into." [03:55]

The circumstances surrounding Williams' departure are notable:

"SEC Chair Paul Atkins asked Williams to resign. Atkins is in favor of deregulation... the board says under her leadership it finalized seven projects covering 24 rules and standards, more than under any other chair." [03:59]

Implications of Her Departure:

• Potential Shift in Oversight: Williams was recognized for strengthening regulatory standards. Her exit, prompted by a pro-deregulation SEC chair, could signal a weakening of oversight mechanisms.

• Future Risks: Williams expressed concerns about resource constraints potentially leading to increased fraud risks, especially in economic downturns.

"She said there will be a higher risk of fraud if we head into an economic downturn." [04:30]

This development raises questions about the future robustness of financial oversight and investor protection mechanisms within the U.S. market.

4. Could Tariffs Help Reshore US Drug Manufacturing?

[06:37] The episode culminates in an extensive discussion on the feasibility and implications of imposing tariffs to bring drug manufacturing back to the United States.

Savannah Peters introduces the topic by addressing the current landscape of U.S. drug manufacturing:

"President Trump wants to bring more drug manufacturing to the United States and has talked of tariffs on imported medicine." [06:37]

Key Insights from Experts:

• Marta Voshinska (Brookings Institution):

  "Where your prescription medications are made depends mostly on whether they're patent protected." [06:47]

  She further elaborates that:

  "Pricey name brand medications make up only about 10% of those dispensed to Americans. The remaining 90%... are low-cost generics." [07:03]

  Voshinska emphasizes that the majority of these generics are produced overseas, primarily in India and China.

• Aaron Kesselheim (Harvard Medical School):

  "Reliance on imports is risky when there are issues that disrupt the international trade supply chain. That puts a strain on the US drug supply." [07:20]

  He highlights the challenges of reshoring:

  "Building up US Capacity is expensive... Drug companies would need to build factories, hire and train workers, secure approvals from an FDA crippled by budget cuts." [07:20]

• Aaron Fox (University of Utah):

  "Tariffs could drive some companies away altogether... patients may not get the most preferred product, experience adverse effects, or face treatment delays." [07:37]

  Fox warns that tariffs might lead to higher prices for generics, which are currently available at low costs.

Marta Voshinska responds with a conditional stance:

"Tariffs might be necessary to shore up domestic supply chains... if used strategically and as part of broader interventions." [08:58]

She underscores the importance of accompanying tariffs with investments to support domestic pharmaceutical manufacturing.

Conclusion

The episode of Marketplace Morning Report provides a multifaceted analysis of current economic shifts, from major M&A activities in the energy sector to potential regulatory changes affecting financial oversight. The primary focus on U.S. drug manufacturing reveals the complex interplay between policy tools like tariffs and the realities of global supply chains. Experts present a cautious view, suggesting that while tariffs could incentivize reshoring, significant challenges and unintended consequences must be meticulously managed to ensure that such measures benefit both the industry and consumers.

For listeners seeking to understand the nuances of these economic strategies and their broader impacts, this episode offers valuable insights and expert perspectives.