CNN
—

On Tuesday, President Donald Trump announced his intention to implement tariffs of approximately 25% on imports of automobiles and vital electronics like semiconductors and pharmaceuticals starting as soon as April 2.

Recently, Trump introduced a blanket 10% tariff on goods imported from China, in addition to imposing 25% tariffs on all steel and aluminum shipments.

Regarding the new duties on semiconductors and pharmaceuticals, he indicated to journalists at his Mar-a-Lago estate in Florida that he plans to raise the tariff rates even further over time.

“The rates will increase significantly over the course of the year,” he stated, while also mentioning that he aims to provide affected businesses with an opportunity to relocate their manufacturing operations to the U.S. to evade these tariffs.

“We want to give them a little bit of a chance,” he emphasized.

This announcement follows days after Trump initiated an investigation into the tax and tariff strategies of other countries, setting the stage for new reciprocal tariffs that could commence right after the investigation wraps up on April 2, according to Howard Lutnick, Trump’s choice for Commerce Secretary.

Trump’s latest declaration highlights his endeavor to create a more equitable trade environment with international markets and to encourage the return of significant industries back to American soil. He has consistently criticized what he perceives as inequitable foreign treatment of U.S. exports.

The introduction of these substantial tariffs could produce widespread repercussions, affecting not only the specified industries but also increasing prices for consumers and costs for businesses, according to economists and industry analysts.

Experts warn that consumers are likely to bear the brunt of the new import duties on vehicles, with potential price hikes reaching thousands of dollars. Almost half of the cars and light trucks sold in the U.S. last year were imported.

The president has not clarified whether the 25% tariff will apply universally across all countries or if specific exemptions will be granted for vehicles manufactured in Mexico and Canada under a free trade agreement established during his initial term.

While companies like Nvidia are leading the semiconductor sector in the U.S., chip manufacturing has largely been outsourced to Asia due to economic and technological factors over recent decades. Nvidia has chosen not to comment on this matter.

Taiwan Semiconductor Manufacturing Company (TSMC) is a pioneer in the contract chipmaking model, capable of producing chips for other companies under their own labels, and currently stands as the largest contract chip producer globally.

TSMC reported to CNN that its chip manufacturing facilities in Arizona, announced in 2020 during Trump’s first administration, are progressing as scheduled but did not provide any additional comments.

Trump has repeatedly accused Taiwan of appropriating America’s chip industry, a claim that many experts dispute.

Although the specifics remain uncertain, the impending semiconductor tariffs could primarily impact Asian chip manufacturers, such as TSMC, Samsung from South Korea, and SK Hynix, whose production facilities are predominantly located in Asia. This potential difficulty might accelerate their efforts to establish or expand operations in the U.S.

In the pharmaceutical sector, the United States imported over $176 billion worth of medications and related products in 2023, based on U.S. trade statistics, rendering it the largest importer of pharmaceutical goods for that year.

Pharmaceutical companies in Europe, India, and China may face significant challenges from these tariffs. In 2023, Ireland represented 20.4% of pharmaceutical imports to the U.S., followed by Germany at 10.8%, Switzerland at 8.6%, India at 6.2%, and China at 3.4%.