United States President, Donald Trump has advanced plans to introduce tariffs on semiconductors and pharmaceutical products.
In the latest flurry of trade announcements, the Trump administration launched investigations into the national security implications of importing the goods and related products, including chip-making equipment and pharmaceutical ingredients, as part of a bid to impose tariffs on both sectors on national security grounds.
The probes follow Trump’s remarks over the weekend that he would announce the details of new tariffs on semiconductors within days, after his administration exempted the chips and other high-tech goods from his “reciprocal” tariffs unveiled on April 2.
The investigations are the latest trade-related probes initiated by the US under Section 232 of the Trade Expansion Act, which the Trump administration has also used to scrutinise imports of copper, lumber, steel and aluminium.
Semiconductors are crucial to the manufacturing of almost all modern electronics.
The US is heavily dependent on semiconductor imports from Asia, especially Taiwan, though Trump, like his predecessor Joe Biden, has been pushing companies to make more of the chips domestically.
In an announcement that was hailed by the White House as an example of Trump’s trade policies in action, chip giant Nvidia on Monday said that it would spend up to $500bn building its artificial intelligence super computers on US soil for the first time.
Trump’s move towards new tariffs on chips and pharmaceuticals raises the prospect of fresh turmoil for businesses and financial markets around the globe, which have been roiled by the US president’s dizzying back-and-forth announcements on trade.
Financial markets and businesses have been waiting for signs that Trump’s tariffs will be watered down or dropped outright if the administration can extract concessions from its trading partners.
In an interview with Fox Business, Kevin Hassett, Trump’s top economic adviser, said that officials were making “astonishing” progress in their negotiations with US trading partners and had received “amazing offers” from more than 10 countries.
Hassett did not specify which countries the US was making progress with.
The drug industry has argued that tariffs could increase the chance of shortages and reduce access for patients.
Generic drug manufacturers operate on very thin margins, and any cost increase might prompt some to leave the market since it could be hard for them to absorb or pass along the tariff’s impact.
John Murphy III, CEO of the Association for Accessible Medicines, the trade group for generic and biosimilar medicine, said in a statement that tariffs “will only amplify the problems that already exist in the U.S. market for affordable medicines.”
He added that without substantive regulatory and reimbursement changes to the US market, tariffs will “exacerbate shortages that hinder patient access today.”
Brand name drug manufacturers have a greater ability to absorb tariffs, but some experts expect them to pass along the cost.
Trump Floats Pause On Auto Tariffs
On Monday, Trump suggested that he could offer automakers some relief from his 25 percent tariffs on vehicles and auto parts to give them time to adjust their supply chains.
“I’m looking at something to help some of the car companies, where they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.
“I’m a very flexible person. I don’t change my mind, but I’m flexible, and you have to be.”
Donald Trump
US stocks, which have been on a rollercoaster ride amid Trump’s tariff announcements, rose higher on Monday, with the benchmark S&P500 and tech-heavy Nasdaq Composite gaining 0.79 percent and 0.64 percent, respectively.
Asian markets rose on Tuesday morning, with Japan’s Nikkei 225 and South Korea’s KOSPI up 1.16 percent and 0.67 percent, respectively, as of 02:00 GMT.
READ ALSO: Bright Simons Slams Ghana’s Elite over Handling of KIA Drug Trafficking Allegations
