US President Donald Trump said that US tariffs on semiconductor and pharmaceutical imports would be announced “within the next week or so,” as the administration prepares to target key economic sectors in its effort to remake global trade.
“We’ll be putting a initially small tariff on pharmaceuticals, but in one year — one and a half years, maximum — it’s going to go to 150 percent and then it’s going to go to 250 percent because we want pharmaceuticals made in our country,” Trump said yesterday in an interview on CNBC.
“We’re going to be announcing on semiconductors and chips, which is a separate category,” the US president continued.
Photo: Carlos Barria, Reuters
The US Department of Commerce has been investigating the semiconductor market since April to set the stage for possible tariffs on an industry that’s expected to generate nearly US$700 billion in global sales. Under Trump, the US has already imposed levies on imports of cars and auto parts as well as steel and aluminum.
Levies on imported chips threaten to sharply increase costs for large data center operators including Microsoft Corp, OpenAI, Meta Platforms Inc and Amazon.com Inc that plan to spend billions of dollars on purchases of advanced semiconductors needed to propel their artificial intelligence businesses.
Trump has also threatened debilitating tariffs on the drug industry in an effort to force manufacturing back to the US. The US president recently demanded major suppliers of medicines drastically cut costs or face additional, unspecified penalties.
The world’s largest drugmakers, including Merck & Co and Eli Lilly & Co, operate scores of manufacturing sites across the globe. Nearly 90 percent of US biotech companies rely on imported components for at least half of their approved products, according to the Biotechnology Innovation Organization.
The sectoral tariffs on pharmaceuticals, metals and other industries stem from trade investigations that can last about nine months and are imposed on national security grounds under Section 232 of the Trade Expansion Act of 1962. It’s seen as stronger legal footing than the emergency powers Trump used for his country-specific levies, which face court challenges. Those so-called "reciprocal" tariffs are slated to go into effect tomorrow.
Trump is seeking fairness in bilateral commerce, with the aim of encouraging foreign investment in the US, bolstering domestic production and shoring up national industrial security. He also see duties as a means to raise revenue for the government.
Meanwhile, the US trade deficit narrowed in June to the tightest since September 2023 as companies scaled back on imports after a massive surge earlier in the year.
The goods and services trade gap shrank 16 percent from the prior month to US$60.2 billion, commerce department data showed yesterday.
The value of imports fell 3.7 percent, dragged down by the lowest value of imported goods since March last year. Exports contracted by a lesser amount. The figures aren’t adjusted for inflation.
Imports of consumer goods fell to the lowest level since September 2020, and industrial supplies and motor vehicles were also down. Meantime, inbound shipments of capital equipment rose.
The June report showed the merchandise-trade shortfall with China narrowed to the lowest in data back to 2009 as imports declined, while the deficit with Mexico narrowed after reaching a record level in May. The goods trade deficit with Canada narrowed to the tightest since the end of 2020.
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