Trump Teases Tariffs on Chips, Pharmaceuticals

Sarah Bianchi, former deputy US trade representative said President Trump faces major challenges to his bid to use punishing tariffs to reorient the drug and semiconductor supply chains back to the 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% and then it’s going to go to 250% because we want pharmaceuticals made in our country,” Trump said Tuesday in an interview on CNBC.

“We’re going to be announcing on semiconductors and chips, which is a separate category,” the president continued.

The Commerce Department has been investigating the semiconductor market since April to set the stage for possible tariffs on an industry that’s expected to generate nearly $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 emphasized using tariffs to spur investments in domestic manufacturing including chip production, and on Tuesday he hailed Taiwan Semiconductor Manufacturing Co.’s plans to expand its US presence.

“You know, we have the biggest in the world, as you know, from Taiwan is coming over and spending $300 billion in Arizona, building the biggest plant in the world for chips and semiconductors,” he said.

It’s unclear where Trump derived the figure he cited. TSMC envisions a total investment of $165 billion over the next several years for six advanced semiconductor plants and two packaging facilities along with a research center in Arizona.

TSMC and the White House did not immediately return queries seeking clarity on those remarks.

The president has also threatened debilitating tariffs on the drug industry in an effort to force manufacturing back to the US. Trump 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% 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. 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 on Thursday.

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