Trump intends to enact a 25% tax on automobiles, semiconductors, and pharmaceutical products.
Trump has instituted a 10% broad tariff on Chinese goods and 25% tariffs on imports of steel and aluminum. The president has hinted at increasing tariffs on semiconductor chips and medications, stating they will rise significantly within a year. Companies could theoretically circumvent tariffs by moving their factories to the U.S.
Recent developments include Trump initiating an investigation into foreign nations' tax and tariff practices, which could pave the way for new reciprocal tariffs starting April 2. This continued push towards balance in trade negotiations and reshoring strategic industries is a key component of Trump's strategy, as he repeatedly criticizes perceived unfair treatment of American exports.
Those conversant in economy and industry have voiced their concerns about the repercussions. Consumers, in particular, could face higher prices due to import taxes on automobiles, with approximately half of all U.S. vehicle sales coming from foreign countries.
Details regarding whether all countries will be subject to those 25% tariffs or if countries within free trade agreements will be excluded have not been disclosed. The semiconductor industry, dominated by U.S. companies but often manufactured in Asia to save costs and streamline production, could be impacted heavily.
As for the pharmaceutical market, the U.S. was the leading importer in 2023, with significant holdings controlled by European, Indian, and Chinese firms. Companies like TSMC and European generic drug manufacturers are likely to face competition, which might result in market share losses or stunted profitability.
It's worth noting that tariffs could disrupt global supply chains, intensify trade tensions, incur economic costs, and deter investment. Asian giants like TSMC and European, Indian, and Chinese pharmaceutical firms may bear the brunt of these consequences, potentially leading to economic instability across affected industries.
Lutnick, a prominent business figure, recently warned about the potential impact of increasing tariffs on various sectors in 2023. The economy might face significant challenges if tariffs on semiconductor chips and medications are indeed implemented, as suggested by Trump. The president's proposed tariffs could have bearing on companies like TSMC and European generic drug manufacturers, potentially leading to economic instability in these industries.
