Trump eyes new tariffs on semiconductors and pharmaceuticals as U.S. only makes 20% of world’s drugs and 0% of advanced logic chips
The Trump administration has taken its next steps toward imposing more tariffs on key imports, launching investigations into imports of computer chips, chip making equipment and pharmaceuticals.
The Department of Commerce posted notices about the probes late Monday on the Federal Register, seeking public comment within three weeks. It had not formally announced them earlier.
Although President Donald Trump paused most of his biggest tariff hikes last week for 90 days, apart from those for imports from China, he has said he still plans tariffs on pharmaceutical drugs, lumber, copper and computer chips.
The Commerce Department said it is investigating how imports of computer chips, equipment to make them and products that contain them — which include many daily necessities such as cars, refrigerators, smart phones and other items — affect national security. Section 232 of the Trade Expansion Act of 1962 permits the president to order tariffs for the sake of national security.
The probe includes assessing the potential for U.S. domestic production of computer chips to meet U.S. demand and the role of foreign manufacturing and assembly, testing and packaging in meeting those needs.
Among other aspects of the entire computer chip supply chain, the government intends to also study the risks of having computer chip production concentrated in other places and the impact on U.S. competitiveness from foreign government subsidies, “foreign unfair trade practices and state-sponsored overcapacity.”
After Trump said electronics would not be included in what his administration calls “reciprocal” tariffs of up to 50% on some nations, U.S. Commerce Secretary Howard Lutnick explained in an interview on ABC News that pharmaceuticals, semiconductors and autos will be handled with “sector specific” tariffs.
“And those are not available for negotiation,” Lutnick said. “They are just going to be part of making sure we reshore the core national security items that need to be made in this country. We need to make medicine in this country,” he said. “We need to make semiconductors.”
The investigation into pharmaceutical imports includes ingredients used to make such drugs and touches on many of the same aspects of relying on imports to make them.
Asked about his plans for more tariffs on pharmaceuticals, Trump said Monday, “Yeah, we're going to be doing that.”
He said it would be in the “not too distant future.”
“We’re doing it because we want to make our own drugs,” he said.
More than 70% of the materials, or active pharmaceutical ingredients, used to make medicines made in the United States are produced in other countries, with India, the European Union and China leading suppliers. The U.S. produces about a fifth of all pharmaceuticals made worldwide, but consumes about 45%, far more than any other country.
The U.S. also is a major producer of semiconductors, but only in some areas. It relies heavily on imports from Taiwan and South Korea for certain kinds of advanced chips. In particular, Taiwan dominates advanced logic chip production at 92% of all fabrication capacity according to the International Trade Administration, with South Korea making 8%.
Products like laptops, smartphones and the components needed to make them accounted for nearly $174 billion in U.S. imports from China last year. The administration's plans suggest that such electronics will still be taxed by previous (non-“reciprocal”) tariffs — and potentially under additional, sector-specific levies.
Although major computer chip makers like Taiwan Semiconductor Manufacturing Corp. are investing heavily in U.S. manufacturing facilities, partly due to incentives put in place during former President Joe Biden's time in office, the costly process of changing entire supply chains would take years.
Separately, the Commerce Department said Monday that it was withdrawing from a 2019 agreement that had suspended an antidumping investigation into imports of fresh tomatoes from Mexico, effective in 90 days. It said the current arrangement failed to protect U.S. growers from “unfairly priced” imports of tomatoes. Most tomatoes from Mexico will be subject to a 20.91% tariff, it said.
This story was originally featured on Fortune.com