Trump’s Bold Move: 25% Tariffs on Autos, Chips, and Pharmaceuticals – What It Means for Consumers

CNN —

President Donald Trump announced plans to impose tariffs of about 25% on auto imports, semiconductors, and pharmaceuticals starting April 2. This could significantly change how these products are priced in the U.S.

Recently, Trump introduced a 10% tariff on various goods from China and a 25% tariff on all steel and aluminum imports. During a gathering at his Mar-a-Lago resort in Florida, he mentioned that the tariffs on semiconductors and drugs might increase even further over time.

“It’ll go substantially higher over the course of a year,” he said. However, he expressed a desire to give companies time to relocate their manufacturing to the U.S. to avoid these tariffs. “We want to give them a little bit of a chance,” he added.

This announcement follows Trump’s order for an investigation into the tax and tariff practices of other countries. The outcomes of this investigation could lead to new tariffs being enforced shortly after it concludes.

The goal of these tariffs is to create a more “balanced” trade with other nations and to bring strategic industries back to the U.S. Trump has frequently criticized what he sees as unfair treatment of U.S. exports.

However, experts warn that these steep tariffs could have widespread consequences beyond the affected industries. Consumers might face higher prices, and businesses could see increased costs. Specifically, car prices could rise dramatically, with many vehicles in the U.S. sourced from abroad.

Details about whether the 25% tariff would apply universally or exclude cars made in Mexico and Canada remain unclear.

While American companies, like Nvidia, are strong in the semiconductor field, most chip production has shifted to Asia to cut costs. Taiwan Semiconductor Manufacturing Company (TSMC), a leader in contract chip production, has the largest market share in this area.

TSMC stated that their chip plants in Arizona, announced during Trump’s first term, are progressing as planned but didn’t provide additional comments.

Trump has previously accused Taiwan of undermining the U.S. chip market, a claim that experts often dispute.

If these new tariffs are implemented, Asian companies like TSMC and South Korean giants Samsung and SK Hynix could face significant challenges, potentially pushing them to establish more operations in the U.S.

In the pharmaceutical sector, the U.S. imported over $176 billion worth of drugs and related goods in 2023, making it the world’s largest importer of these products. Countries like Ireland, Germany, and India could be particularly affected, as they supply a significant portion of the U.S. pharmaceutical market.