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Shares of Tesla are in positive territory for the year after brushing off early 2025 pressure.
Key Takeaways

• Tesla's earnings, due Wednesday, kick off the Magnificent Seven earnings season.
• Many investors have moved on to the company's next-generation opportunities as drivers for its stock. But the shares have underperformed the Big Tech group so far this year.

Halfway though 2025, Tesla stock looked like a big-time laggard.

The EV maker's shares were down more than 20% through the first six months of the year—a stretch that was rough for just about everyone, though by the end of it the S&P 500 and Magnificent Seven group of tech shares had moved back into the green even as Tesla lagged. Then the third quarter happened: Tesla (TSLA) was the best-performing stock in the group of Big Tech elites, and here we are—with the shares now up some 10% since the start of 2025.

Where to next? Investors, at least for now, have signaled that they're willing to look at the longer-term picture. Non-car-sales things—including optimism about robotaxis and robots, as well as a new pay proposal for Elon Musk and a big stock purchase by the CEO—were tailwinds. Several Wall Street analysts whose price targets hadn't kept up finally got with it.

"The Tesla story going forward is around the AI transformation being led by the autonomous and robotics initiatives," Wedbush's bullish analysts wrote in a note published Sunday.

Why This Matters to Tesla Investors

Shares of Tesla have cooled a bit since the start of the month, but they remain well above Wall Street analysts' consensus price target for the stock. That discrepancy highlights the challenge facing investors as they decide what to make of the company's quarterly results, and whatever pronouncements about its longer-term opportunities might be made.

There will, however, undoubtedly still be plenty of attention on its third-quarter earnings, due Wednesday afternoon.

Deliveries are already in hand, with the company turning in better than expected quarterly numbers, though an update to Tesla's car lineup will likely mean renewed attention on signs about car demand. (Analysts have dutifully issued estimates: Visible Alpha's means for revenue and net income are $26.6 billion and $1.5 billion, respectively.)

Things have moderated a bit since Tesla stock logged a year-to-date closing high near $460 to start this month, though they've generally stayed around levels in line with their latest run-up. Wall Street, however, is still wary: The mean price target on Visible Alpha, around $365, is about 17% off Friday's close. And the stock has underperformed the Magnificent 7 ETF (MAGS) this year.

More broadly, Tesla's earnings are the first of the Magnificent 7 reports, essentially kicking off Big Tech earnings season. (Netflix's (NFLX) numbers are also due this week.) Early in the third-quarter reporting season, Bank of America analysts said Monday, the S&P 500 companies that have already reported have beaten estimates by 7% as a group; the bank expects total Q3 earnings growth of 11%.

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Apple shares climbed to an all-time high Monday following a report suggesting strong demand for the company’s new iPhone 17
Key Takeaways

• Major U.S. equities indexes gained at midday Monday ahead of a slew of earnings due later in the week.
• Apple shares surged following a report suggesting strong demand for the company’s new iPhone 17 series in the U.S. and China.
• Shares of USA Rare Earth jumped after receiving a bullish rating from William Blair analysts.

Major U.S. equities indexes gained at midday Monday ahead of a slew of earnings due later in the week, and amid some optimism the ongoing federal shutdown could end soon. The Dow, S&P 500, and Nasdaq all advanced.

Apple (AAPL) shares climbed to an all-time high following a report suggesting strong demand for the company’s new iPhone 17 series in the U.S. and China, which account for the bulk of the company’s phone sales.

Cleveland-Cliffs (CLF) shares took off after the steelmaker reported a narrower-than-expected loss, lowered its estimate for full-year expenditures, and told investors it is looking into building a rare earths mining business.

Shares of USA Rare Earth (USAR) and other companies in the sector also jumped after analysts at William Blair initiated coverage of the stock and four others in the sector with an "outperform" rating.

Cooper Companies (COO) shares rose following reports activist investor Jana Partners has taken a stake in the medical device maker and plans to push for strategic alternatives, possibly including a merger with eyewear giant Bausch + Lomb (BLCO). Bausch + Lomb shares were up as well.  

AppLovin (APP) was the worst-performing stock in the S&P 500 amid reports the mobile advertising site is being investigated by regulators over its handling of consumer data.

Shares of Progressive (PGR) lost ground following a downgrade to "underweight" from "equal weight" from Morgan Stanley, which voiced concerns future profits may not justify the stock's price.

Gold prices climbed while oil futures dropped. The yield on the 10-year Treasury note was little changed. The U.S. dollar gained on the pound, but lost ground to the euro and yen. Most major cryptocurrencies traded in positive territory. 

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Counterpoint Research pointed to the iPhone 17 base model's "great value" for its popularity
Key Takeaways

• Apple’s iPhone 17 outsold the prior lineup in the U.S. and China during its first 10 days of availability, according to a report from Counterpoint Research.
• The base model performed particularly well in China, while many American buyers upgraded to the Pro Max version.

Apple shares climbed to an all-time high Monday following a report suggesting strong demand for the company’s new iPhone 17 series in the U.S. and China, which account for the bulk of the company’s phone sales.

Apple’s (AAPL) iPhone 17 "far outpaces" sales of the company's prior model, outselling the iPhone 16 by 14% during the first 10 days of availability in the U.S. and China, according to a report from tech product research firm Counterpoint Research.

Shares of Apple rose nearly 4% to close at a record high following the news, making the stock one of the top performers in the Dow Jones Industrial Average Monday.

Why This News Is Significant

Strong early sales of the iPhone 17 could be taken as an indicator of resilient brand loyalty and spending power among consumers in the face of economic uncertainty.

Counterpoint found the base model of the iPhone 17 was a big driver of sales in China, while the premium iPhone 17 Max saw strong demand in the U.S.

Counterpoint Senior Analyst Mengmeng Zhang pointed to the iPhone 17 base model's "great value" for its performance, with “a better chip, improved display, higher base storage, selfie camera upgrade—all for the same price as last year’s iPhone 16.” Sales of the iPhone 17 base model in China were nearly double those of the 16 over a comparable period.

Meanwhile, the iPhone 17 Pro Max saw sales surge in the U.S., as Counterpoint said those who purchased Apple phones during the COVID-19 pandemic moved to upgrade and large carriers enticed buyers with higher subsidies.

This article has been updated since it was first published to reflect more recent stock prices.

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Fed Governor Christopher Waller says AI-driven job changes are already underway.
Key Takeaways

• At a DC Fintech Week event last week, Federal Reserve Board Governor Christopher J. Waller suggested that AI is already reshaping the workforce, with some companies replacing customer support and IT roles through attrition.
• But the transition to AI doesn't always work out. Klarna attempted to replace customer service agents with AI in 2023 but eventually backtracked, hiring humans.
• Still, Waller acknowledges that some job losses may occur due to AI. However, he remains optimistic about its long-term economic benefits.

While CEOs of major companies like Amazon (AMZN) have warned that artificial intelligence (AI) could result in job losses in the future, Federal Reserve Governor Christopher J. Waller recently suggested that outcome is already here. Some workers in customer support and administrative fields are being replaced by AI instead of by humans.

"Retailers in particular are cutting back on employment for call centers and IT-related occupations. So far, most say this is being handled through attrition, but a number of retailers say that there is the potential for downsizing next year," Waller said on October 15 at DC Fintech Week.

Although AI has yet to have a widespread impact on the labor market, Waller indicated that companies have begun preparing for the potentially transformative effects of the new technology.

"AI is influencing recruiting for these firms, with some scaling back hiring because of AI and others adding workers who are proficient in its use," Waller said.

Klarna, a buy-now-pay-later company, announced that it used AI to do the work of 700 customer service agents. However, CEO Sebastian Siemiatkowski reversed course, acknowledging that human customer support was still necessary.

“As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality,” Siemiatkowski told Bloomberg in May 2025. “Really investing in the quality of the human support is the way of the future for us.”

Waller is optimistic about the potential of AI and its impact on the economy—even if it results in job loss for some workers.

Why This Is Important

If AI is able to yield substantial productivity gains, some believe it could result in greater economic growth but also cause widespread job loss, especially for college-educated workers.

"AI is moving faster than previous waves of innovation. ... The challenge is to keep pace—to help workers and firms adjust so the gains in efficiency translate into higher real wages and sustained growth across the economy," Waller said. "For policymakers, we must let the disruption occur and trust that the long-run benefits will exceed any short-run costs."

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An Amazon Web Services outage caused disruptions for many companies today
Key Takeaways

• An outage at Amazon Web Services early Monday disrupted operations at a wide range of companies.
• Amazon confirmed the glitch at 3:51 a.m. ET, and said by 6:35 a.m. ET the issues had been addressed.

Companies that use Amazon Web Services are recovering after a problem with the cloud service disrupted operations at a wide range of companies Monday.

Some of the firms affected included trading platform Coinbase Global (COIN), and Snap’s (SNAP) social media site Snapchat, along with major airlines like Delta Air Lines (DAL) and United Airlines (UAL).

Amazon (AMZN) confirmed the glitch at 3:51 a.m. ET, and by 6:35 a.m. ET, said the issue had been "fully mitigated," with most AWS Service operations back to normal. However, it added that it continued to work on some lingering disruptions.

Why This Is Significant

The scale of the AWS outage's impacts across industries underscores the wide reach of Amazon's cloud network and global businesses' dependence on it.

As of 8:40 a.m. ET, website problem reporting company Downdetector reported nearly 2,000 reports of outages possibly linked to AWS.

The news sent Amazon shares tumbling in premarket trading, but shares rose close to 1% slightly after the open. They've lost about 2% of their value in 2025, compared to a 14% gain for the S&P 500.

News of the day for Oct. 20, 2025

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Major stock indexes posted solid gains last week despite several volatile days of trading.

Stock futures are rising this morning as investors await a slew of earnings reports, key inflation data and updates on trade negotiations in the coming days;  Amazon Web Services experienced disruptions that created service issues for several major websites; Apple’s (AAPL) iPhone 17 model outsold the prior model in the U.S. and China during its first ten days on the market; proxy firm Institutional Shareholder Services advised Tesla (TSLA) shareholders to reject a proposed pay package for CEO Elon Musk; and Cooper Companies (COO) stock is rising on news activist investor Jana had built a stake in the medical device maker. Here's what you need to know today.

1. Stock Futures Gain to Kick Off Busy Week of Earnings Reports

Stock futures are gaining ground at the start of of a busy week for corporate earnings, after major indexes rose last week despite a volatile stretch of trading fueled by banking sector worries and trade-related tensions. Investors are awaiting further developments on the trade front and awaiting the scheduled release on Wednesday of inflation data that will factor into the Federal Reserve's upcoming decision on interest rates. Futures tied to the Dow Jones Industrial Average were up 0.2% recently, while those linked to the benchmark S&P 500 and the tech-focussed Nasdaq added 0.3% and 0.4%, respectively. Gold futures were up nearly 2% at $4,295 an ounce, rebounding from a downturn on Friday that followed a string of record highs. Bitcoin (BTCUSD) was trading near $111,000, after dropping below $104,000 on Friday. The yield on the 10-year Treasury note, which affects borrowing costs on an array of consumer loans, held steady at 4.01%.

2. Amazon Web Services Outage Brings Down Several Major Websites

Several major websites went down after cloud platform Amazon Web Services experienced major outages early Monday. The  outage affected several Amazon (AMZN) services, including Alexa, while also reportedly creating disruptions for Disney+, Lyft, the New York Times, Reddit, Ring, Snapchat, Reddit, Ring, Robinhood, T-Mobile, United Airlines, Venmo, Verizon, gaming site Fortnite, OpenAI’s ChatGPT, Epic Games Store, AI model Perplexity and the McDonalds app. Shares of Amazon were little-changed in premarket trading. The shares have lost 3% since the start of the year, making Amazon the only member of the Magnificent 7 group of major technology stocks to be in negative territory in 2025.

3. Apple iPhone 17 Sales Outpacing Prior Model

Apple’s (AAPL)  iPhone 17 model outsold the iPhone 16 by 14% during the first ten days of sales in the U.S. and China, the two markets that make up the bulk of the company’s phone sales, according to Counterpoint Research. The report said that improvements to the iPhone 17 provided value that helped draw in more buyers. “A better chip, improved display, higher base storage, selfie camera upgrade – all for the same price as last year’s iPhone 16,” said senior analyst Mengmeng Zhang. The report found that the base model iPhone 17 performed well in China, while the premium iPhone 17 Max saw strong demand in the U.S., with discounts provided by phone carriers helping to spur sales. Apple shares were up 1.5% in recent premarket trading.

4. Proxy Firm Urges Tesla Shareholders to Reject Musk Pay Package

Proxy voting service Institutional Shareholder Services (ISS) is advising Tesla (TSLA) shareholders to vote against a proposed $1 trillion pay package for CEO Elon Musk. The proxy firm wrote that it was concerned about the magnitude and structure of the pay package, which features several lofty benchmarks that include pushing the company’s value to more than $8.5 trillion, well above its current market capitalization of roughly $1.5 trillion. ISS also advised shareholders to reject a proposal for Tesla to invest in Musk’s xAI, the AI company that merged with Musk’s X social media platform earlier this month. Tesla shares, which have gained 33% over the past three months, were up about 1% ahead of the opening bell. The company is scheduled to report earnings on Wednesday.

5. Shares of Medical Device Maker Cooper Rise After Activist Jana Builds Stake

Shares of Cooper Companies (COO) surged more than 5% in premarket trading after activist investor Jana Partners reportedly built a stake in the medical device maker. The Wall Street Journal said Jana is looking for strategic alternatives for the company, including a potential deal to combine the company’s contact lens unit with rival Bausch + Lomb (BLCO). Shares of Bausch + Lomb were down nearly 2% in premarket trading.

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Key Takeaways

• The Treasurys market faced volatility late last week as concerns about the banking sector drove yields down.
• If investors get additional hints that economic weakness extends beyond the job market, yields could fall again, analysts said.

Long-term interest rates reversed their backslide a bit on Friday, as traders got a bit less gloomy about potential cracks in the banking system forcing the Federal Reserve to cut interest rates a bit more than planned. 

The yield on the benchmark 10-year U.S. Treasury rate, which helps drive borrowing costs on mortgages, climbed back above 4% on Friday. It had breached that mark on Thursday, when it closed at 3.97%, and had been sliding again earlier on Friday before closing above 4%. 

The declines last week followed concerns over the health of some banks’ loan portfolios, as troubles with a corporate borrower emerged at a couple of regional banks out West. Investors were already on their toes after JPMorgan Chase CEO Jamie Dimon warned about potential cockroaches earlier in the week.

Investors have been “driven by the perception that underneath strong economic numbers, there are crevasses of credit and valuation risks that are deepening and broadening,” Viktor Shvets, a strategist at Macquarie, wrote on Friday.

Why This Matters to You

Treasury yields influence borrowing costs of products like mortgages. However, lower yields can also mean that investors have less confidence in the future of the economy.

The Fed was already gearing up to cut rates later this month and in December, but a weaker economy could prompt more rate cuts in 2026, analysts say. That could provide a boost to job growth if it is indeed faltering, while also lowering the interest rates that borrowers pay on their bank loans and preventing more stress.

“The idea that signs of stress are beginning to emerge in specific sectors of the real economy is consistent with the Fed’s efforts to normalize policy rates,” Ian Lyngen, a strategist at BMO Capital Markets, wrote on Friday. 

The Fed has already cut short-term interest rates from its post-pandemic high of a range of 5.25% to 5%. After pausing for some months, it proceeded with cutting rates again last month and lowered rates to a range of 4% to 4.25%. Fed officials have penciled in a couple of more cuts this year.

Long-term rates, such as the 10-year yield or the 30-year mortgage rate, are influenced by a series of factors. However, the outlook for the Fed’s policy is one factor that pushes them up or down.

Investors don’t seem to be betting on overly aggressive Fed cuts, such as a jumbo 50 basis point cut at the Fed’s October meeting. The Fed tends to move rates in 25-basis-point increments, and futures market pricing suggests trades see a 99% chance of the Fed sticking to that strategy, according to the CME Group’s FedWatch tool.

“There will be continued talk of the potential for 50 basis point cuts, but we still remain solidly at 25 twice for the rest of the year,” Andrew Brenner, vice chairman at NatAlliance Securities, wrote in a note to clients. 

An inflation report next week will also be critical, as a higher-than-expected jump in prices could force the Fed to be a bit less aggressive in rate cuts.

Investors, meanwhile, seemed in a cheerier mood after Thursday’s slump in the stock market, which had hit regional banks particularly hard. Last week's jitters revived memories of 2023, when Silicon Valley Bank's collapse triggered worries over regional banks as a whole.

The KBW Nasdaq Regional Banking Index was up 1.7% on Friday, recovering some of its losses after it fell 6% on Thursday.

Regional bank CEOs who reported earnings on Friday, meanwhile, told analysts their portfolios remained broadly healthy.

“Credit quality is strong,” said Bill Rogers, the CEO of North Carolina-based Truist Financial (TFC), adding that the bank will remain “hypervigilant” over any signs of cracks. 

For its part, Truist’s stock was up 3.67% at Friday's close.

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Trade schools and programs now account for nearly 20% of public two-year higher education enrollment.
KEY TAKEAWAYS

• More Gen Z high school graduates are opting out of traditional four-year bachelor's degrees and choosing shorter trade degrees or certificate programs.
• President Donald Trump's administration is providing funding for students to attend trade schools and is planning to make it easier for states to create and administer programs.

More young Americans are choosing to skip traditional university for a trade degree or certification, and the Department of Education has plans to support this shift.

College enrollment numbers have declined since the onset of COVID-19, as university costs rise and become too expensive for some. Instead of college, many Gen Z high school graduates opt to work straight out of school or choose a trade or vocational school instead of a traditional four-year bachelor's degree.

For the spring 2025 term, enrollment for Bachelor's programs grew by 2.1%. During the same time, comparatively, the number of students signing up for a two-year vocational program grew by 11.7%, according to research by the National Student Clearinghouse Research Center, a higher-education research organization.

Why This Matters to You

As higher education costs continue to rise, many Americans prefer to attend trade or vocational school after high school. The Department of Education is developing several future programs for these Americans.

The Department of Education Is Working On Trade School-Supporting Programs.

President Donald Trump issued an executive order in April, ruling that his administration would invest in and improve American workforce programs and apprenticeships. In response, the Department of Education announced in May that it would partner with the Department of Labor to help states create more trade school programs.

The partnership recently announced it is launching a "content management system" to help states create a four-year plan to develop and administer workforce, adult education, and family literacy programs. The Department of Education said the system is still being implemented and will update states when it is officially launched.

“The Trump Administration is committed to ensuring that all Americans are prepared for a fulfilling and meaningful career," Secretary of Education Linda McMahon said in a press release. "Thanks to our workforce development partnership, states will now be able to more easily and efficiently administer their programs."

This summer, Congress passed the "One Big, Beautiful Bill," which introduced the "Workforce Pell Grant Program." This new program will start during the 2026-27 academic school year, expanding the Pell Grant program to students taking certificate or licensing programs between eight and 15 weeks.

While students in eligible longer workforce programs have always been able to get Pell Grants, students enrolled in short-term certificate or licensing programs at an accredited higher education institution will now be able to receive these grants. These shorter programs can lead to trade apprenticeships and jobs like HVAC technicians or medical assistants.

However, this grant program may be delayed until the 2027-28 academic year, said Megan Walter, senior policy analyst with the National Association of Student Financial Aid Administrators.

The new Pell Grant program has to go through the Negotiating Rulemaking process before it becomes official. Several higher education experts say hearings to determine the official language of the Workforce Pell Grant Program should finish by Nov. 1 so it can be ready for the 2026 semester. However, the hearings are currently scheduled for December and January.

Once the hearings are complete, it takes at least two months to create a final rule, which is likely not a reasonable amount of time for the program to be implemented by next year, Walter said.

"Best case scenario, they could wrap [Negotiating Rulemaking] up by the end of March, and then they would have to hand it over to the schools, to the state governments to figure out a way to implement this," Walter said. "I can't imagine implementation goes really smoothly in a span of four months."

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Tesla is set to release its quarterly results after the closing bell Wednesday

Trade is the talk of the town this week.

Investors will be watching for updates on trade policy ahead of a scheduled meeting between President Donald Trump and China's Xi Jinping, as well as a highly anticipated inflation reading, after a volatile week of trading marked by worries about bad loans at regional banks.

Friday’s release of the Consumer Price Index for September, delayed by the government shutdown, is likely the last major piece of data the Federal Reserve will receive before its interest rate decision next week. Other government reports could remain delayed until there is a resolution to the budget dispute in Washington.

Magnificent 7 member Tesla is set to report earnings Wednesday, when CEO Elon Musk could offer more details on the electric vehicles maker's advances in robotics and artificial intelligence, after a torrid rally in recent months. Intel’s report will be in focus after a flurry of investments in the struggling chipmaker boosted its stock.

Read to the bottom for our calendar of key events—and one more thing.

Spotlight Shines on EVs, AI With Reports Due From Tesla, Intel, and Automakers

Tesla’s scheduled earnings release Wednesday follows stronger-than-expected deliveries as buyers rushed to take advantage of expiring EV tax credits. Big Three automakers Ford and General Motors, also set to report this week, likely benefited from the same tailwinds, though both automakers have scaled back their EV ambitions.

Tesla CEO Elon Musk could offer more details on developments in the company's high-tech offerings beyond EVs, including an expansion of its robotaxi services, its Optimus robots, and self-driving technology. Intel’s report, due Thursday, comes as the U.S. chipmaker’s shares have surged after a string of deals including one that saw the U.S. government take a stake and a partnership with AI leader Nvidia. 

Netflix’s report comes after the streamer recently raised its prices and boosted its revenue outlook. Updates from Coca-Cola and Procter & Gamble could bring some insights into consumer spending, while Friday’s earnings from HCA Healthcare may offer a look into the hospital sector. Gold miner Newmont’s report on Thursday arrives as the precious metal has set a string of new all-time highs .

September Inflation Data Could Influence Fed Decision on Interest Rates

With many economic reports in limbo due to the federal shutdown, Friday's CPI inflation report could be the last major piece of economic data the Fed gets before issuing a decision on interest rates next week. Forecasters expect the report to show prices continuing to rise, but at a slower pace than in August.

The data could influence whether the Fed will continue with its plans to keep lowering interest rates. Fed officials have said their focus is turning to the weakening labor market, which would favor rate cuts. But higher-than-expected inflation could push them to reconsider.

While the release of new home sales data is likely to be delayed, market watchers will still see on Thursday the National Association of Realtors’ existing home sales data for September, as economists look for signs of a resurgence in an anemic housing market. The week will also bring fresh figures on consumer sentiment and Purchasing Managers Index surveys for October.

Quick Links: Recap Last Week’s Trading | Latest Markets News

This Week’s Calendar

Monday, Oct. 20

• U.S. leading economic indicators (September)

Tuesday, Oct. 21

• Federal Reserve Officials Speaking: Fed Governor Christopher Waller to deliver opening, closing remarks at payments conference
• Key Earnings: Netflix (NFLX), GE Aerospace (GE), Coca-Cola (KO), Philip Morris (PM), RTX Corp (RTX), Texas Instruments (TXN), Capital One (COF), Lockheed Martin (LMT), 3M Company (MMM), General Motors (GM)

Wednesday, Oct. 22

• Key Earnings: Tesla (TSLA), SAP (SAP), IBM (IBM), Thermo Fisher Scientific (TMO), AT&T (T), GE Vernova (GEV), Lam Research (LRCX)

Thursday, Oct. 23

• Existing home sales (September)
• Federal Reserve Officials Speaking: Vice Chair for Supervision Michelle Bowman to testify at Senate banking regulations hearing
• Data Delayed by the Shutdown: Initial jobless claims (Week ending Oct. 18)
• Key Earnings: T-Mobile US (TMUS), Intel (INTC), Union Pacific (UNP), Honeywell (HON), Blackstone (BX), Newmont Corp (NEM), Ford (F)

Friday, Oct. 24

• Consumer price index (CPI) (September)
• Other Data to Watch: S&P flash U.S. PMI (October), Consumer sentiment - final (October)
• Data Delayed by the Shutdown: New Home Sales (September)
• Key Earnings: Procter & Gamble (PG), Sanofi (SNY), HCA Healthcare (HCA)

One More Thing

Banking fees are rising at one major bank, with new waiver rules for checking accounts taking effect this month. Investopedia’s Sabrina Karl has more information on options that customers have to avoid paying more.

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Food and Drug Administration Commissioner Marty Makary during an event last month at the White House to promote the Trump administration's plan to lower drug costs.
Key Takeaways

• Economists say the flurry of policies aimed at forcing drug companies to lower prices may not be as effective as President Donald Trump intends.
  
• Tariffs are likely to push up prices, including for generic medications and products made in the U.S.
  

The Trump administration has issued a flurry of orders aimed at lowering pharmaceutical prices, but experts are leery that the actions will achieve that goal.

The latest move in Trump's ongoing campaign to reduce drug prices came late last month when the White House announced a deal between the government and Pfizer (PFE), the multinational company that makes COVID-19 vaccines, Viagra, and other widely used products.

Under the deal, which could serve as a model for agreements with other major manufacturers, the company will sell its products to Medicaid at prices on par with those offered to other developed countries. In addition, the company will offer medications directly to consumers at a discount on Trumprx.gov, a website scheduled to launch in 2026. In return, the company will be exempt from the punishing 100% tariffs Trump is threatening to impose on pharmaceutical imports.

The deal appears to address a longstanding complaint from Trump and U.S. consumer advocacy groups: the sticker prices for many drugs are significantly higher in the U.S. than in Europe. In some cases, drugs that cost thousands of dollars in the U.S. are available for low cost or for free to Europeans. For example, in 2021, a single injection of the arthritis drug Humira cost American patients $3,000, when a generic version was available in Germany for $10, according to reports.

How This Affects Your Finances

If you're currently paying steep prices for brand-name drugs, President Donald Trump's policies aimed at reducing pharmaceutical prices are unlikely to lower them much, according to experts.

Pricing Controls Won't Change Much in the U.S.

The pricing controls Pfizer agreed to harken back to an executive order Trump issued in May. The order required that government health agencies, including Medicare and Medicaid, purchase drugs at no higher a cost than Most-Favored-Nation pricing—that is, at a price comparable to other developed countries. That's significant because the government is the largest buyer of drugs in the country through its Medicare and Medicaid health insurance programs.

However, drug pricing is notoriously complicated, making it easy for companies to obscure what customers are actually paying. In the U.S. and Europe alike, most drugs are not sold directly to consumers, but through insurance companies and other middlemen, who often receive various discounts and rebates that may not be reflected in the list price.

After all is said and done, Medicaid already pays similar prices for drugs as its European counterparts, making it unlikely that the MFN policy will change much, said Geoffrey Joyce, an economist and director of the Schaffer Center for Health Policy and Economics at the University of Southern California.

"Although the MFN policy correctly captures the urgency of addressing unaffordable U.S. drug prices, it is unlikely to meaningfully reduce prices due to legal, operational, and market barriers," Harvard professors Amar H. Kelkar and Edward R. Scheffer Cliff wrote in an editorial for the Journal of the American Medical Association in July.

The Most-Favored-Nation pricing could eventually influence the costs of newly introduced drugs, pushing down prices in the U.S. and raising them in Europe, Joyce said. That could start to happen in the next three to five years, he estimated.

In the meantime, the industry can use a multitude of tactics to keep its profit margins intact.

For example, in circumstances where drug prices would actually have to be lowered, pharma companies may instead just stop offering their drugs in foreign countries. Darius Lakdawalla, chief scientific officer at the USC Schaeffer and Dana Goldman, founding director of the USC Schaeffer Institute for Public Policy and Government Service, wrote in an op-ed.

"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, leaving U.S. consumers with the same prices, pharmaceutical manufacturers with lower profits, and future generations with less innovation," they wrote. "In sum, everyone loses."

Trump RX Duplicates Private Companies

The direct-to-consumer portal is also unlikely to change much, Joyce said.

Only about 10% of people buy prescription drugs directly rather than through insurance. Other companies already offer discounted drugs directly to uninsured consumers, including GoodRx and the Mark Cuban Cost Plus Company, so it's unclear what advantage the government-run store will have over its private counterparts.

Tariffs Could Push Up Prices

If Trump implements pharmaceutical tariffs as promised, the import taxes would likely drive up prices, economists said.

In a social media post last month, Trump said the tariffs would be set at 100%, and would only affect "branded" drugs, seemingly exempting generics, which account for 90% of the drugs sold in the U.S.

Even without the new tariffs, existing Trump tariffs on India and China could still push up drug prices.

Prices will gradually rise as stockpiles run out and contracts are renegotiated, economists at ING said in a commentary. Prices for generic drugs from India are expected to eventually rise 25%, they wrote. Prices on domestically manufactured products could also rise, as many manufacturers source their ingredients from other countries.

Big, Beautiful Bill Undermines Medicare Price Negotiations

Another factor contributing to the rise in drug prices was tucked away in the massive tax and spending legislation known as the "Big Beautiful Bill," which Trump signed into law in August.

The bill includes a provision allowing drug companies to exempt more products from the Medicare price negotiations put into place by former President Joe Biden's administration. The BBB allows more drugs to be considered "orphan drugs" that treat previously untreated conditions.

Joyce said this provision undermines an avenue of drug price reduction that was actually poised to push prices down somewhat.