Trump says he will introduce 25% tariffs on autos, pharmaceuticals and chips

[Barnsley]

PALM BEACH, Florida – US President Donald Trump said on Feb 18 that he intends to impose auto tariffs “in the neighbourhood of 25 per cent” and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.

Mr Trump on Feb 14 said levies on automobiles would come as soon as April 2, the day after members of his Cabinet are due to deliver reports to him outlining options for a range of import duties as he seeks to reshape global trade.

Mr Trump has long pointed to what he calls unfair treatment of US automotive exports in foreign markets.

The European Union, for instance, collects a 10 per cent tariff on vehicle imports, four times the US passenger car tariff rate of 2.5 per cent.

The US, though, collects a 25 per cent tariff on imported pickup trucks from countries other than Mexico and Canada, a tax that makes the vehicles highly profitable for Detroit automakers.

EU trade chief Maros Sefcovic was set to meet US counterparts – Commerce Secretary Howard Lutnick, Mr Trump’s nominee to be US trade representative Jamieson Greer and National Economic Council director Kevin Hassett – in Washington on Feb 19 to discuss the various tariffs threatened by Mr Trump.

When asked whether the EU could avoid the reciprocal tariffs he proposed last week, Mr Trump repeated his claim that the EU had already signalled it would lower its tariffs on US cars to the US rate, although EU lawmakers have denied doing so.

He said he would press EU officials to increase US imports of cars and other products.

Mr Trump told reporters on Feb 18 that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at “25 per cent or higher, and it will go very substantially higher over the course of a year”.

He did not provide a date for announcing those duties and said he wanted to provide some time for drugmakers and chipmakers to set up US factories so that they can avoid tariffs.

Since his inauguration, Mr Trump has imposed a 10 per cent tariff on all imports from China, on top of existing levies, over China’s failure to halt fentanyl trafficking.

He also announced, and then delayed for a month, 25 per cent tariffs on goods from Mexico and non-energy imports from Canada.

He has also set a March 12 start date for 25 per cent tariffs on all imported steel and aluminium, eliminating exemptions for Canada, Mexico, the EU and other trading partners.

Mr Trump also announced that these tariffs would apply to hundreds of imported downstream products made of steel and aluminium, from electrical conduit tubing to bulldozer blades.

Last week, he directed his economic team to devise plans for reciprocal tariffs that match the tariff rates of every country, product by product.

Shelved car tariffs
An auto import tariff of 25 per cent would be a game changer for a global auto industry that is already reeling from uncertainty caused by Mr Trump’s tariff drama.

A similar drama played out in 2018 and 2019 during Mr Trump’s first term, when the Commerce Department conducted a national security investigation into auto imports and found that they weakened the domestic industrial base.

Mr Trump had threatened car tariffs of 25 per cent at that time, but ultimately took no action, allowing the tariff authority from that probe to expire.

But some of the research that went into the 2018 investigation may be reused or updated as part of a new automotive tariff effort. REUTERS

https://www.straitstimes.com/world/...ns-25-auto-tariffs-to-reshape-us-trade-policy

 

[hist78]

Trump threatens 25% tariffs on foreign cars and semiconductor chips

Asked on Tuesday if he had decided the rate of a threatened tariff on cars from overseas, Trump said he would “probably” announce that on 2 April, “but it’ll be in the neighborhood of 25%”.

Trump threatens 25% tariffs on foreign cars and semiconductor chips

White House has raised threat of levies as a means to bolster US economy, ignoring warnings trade wars could derail it

www.theguardian.com

 

[OneEng]

While I understand why many people may support this kind of policy, I strongly suspect that these same people won't understand AT ALL why the price of so many vehicles go up by 25%, the major OEM's begin doing even more layoffs, and major suppliers associated with these OEM's also do layoffs.

The fact is that the cost of tariffs are paid by consumers and the proceeds go to the government. In other words, it is a TAX.

Yes, the net effect in 10 years will be the re-shoring of work .... but that isn't without costs as well. Re-shoring a product will result in more investment that must be re-paid (ie, product price will increase), and higher labor costs (ie, product price will increase). The consumer will ALSO pay these cost increases.

IMO, this is a sure fire way to massively energize inflation in the US.

 

[kevin01]

While I understand why many people may support this kind of policy, I strongly suspect that these same people won't understand AT ALL why the price of so many vehicles go up by 25%, the major OEM's begin doing even more layoffs, and major suppliers associated with these OEM's also do layoffs.

The fact is that the cost of tariffs are paid by consumers and the proceeds go to the government. In other words, it is a TAX.

Yes, the net effect in 10 years will be the re-shoring of work .... but that isn't without costs as well. Re-shoring a product will result in more investment that must be re-paid (ie, product price will increase), and higher labor costs (ie, product price will increase). The consumer will ALSO pay these cost increases.

IMO, this is a sure fire way to massively energize inflation in the US.

First off, I am not a MAGA fan, but I do think some of Trump's policies are needed; otherwise, US will be hollowed out in matter of 10-20 years (i.e. in our life time).

Now you are talking about price increases, which I do agree with. However, the price increase may not be nearly as much as 25%. Several reasons: 1) TSMC is doing very well, enjoying very high profit margins. With a viable competitor emerging, TSMC should and will absorp some of the increasing costs; 2) chips are only parts of TSMC customers' costs, and again, many of them are doing very well, they can and will share some of the cost burden, too.

 

[tedc]

First off, I am not a MAGA fan, but I do think some of Trump's policies are needed; otherwise, US will be hollowed out in matter of 10-20 years (i.e. in our life time).

Now you are talking about price increases, which I do agree with. However, the price increase may not be nearly as much as 25%. Several reasons: 1) TSMC is doing very well, enjoying very high profit margins. With a viable competitor emerging, TSMC should and will absorp some of the increasing costs; 2) chips are only parts of TSMC customers' costs, and again, many of them are doing very well, they can and will share some of the cost burden, too.

Disagree that these policies are the right approach though. We've seen time and time again that cost increases are passed onto the consumer, not eaten as the cost of doing business. Companies are also likely to pass on the cost of reworking chip supply chains as well. This should be an area for government investment, not government gain (from collecting tariffs).

The more direct approach is to provide incentives (tax or otherwise) for companies to use US-made chips. Companies benefit, onshore production is prioritized, and consumers aren't solely shouldering the costs.

We also need to look at this beyond just the impact on TSMC's chips. As we saw during the pandemic chip crunch, it's not just leading edge chips that are made outside the US. This sort of blanket tariff represents a fundamental lack of understanding of the semiconductor industry.

 

[OneEng]

Disagree that these policies are the right approach though. We've seen time and time again that cost increases are passed onto the consumer, not eaten as the cost of doing business. Companies are also likely to pass on the cost of reworking chip supply chains as well. This should be an area for government investment, not government gain (from collecting tariffs).

The more direct approach is to provide incentives (tax or otherwise) for companies to use US-made chips. Companies benefit, onshore production is prioritized, and consumers aren't solely shouldering the costs.

We also need to look at this beyond just the impact on TSMC's chips. As we saw during the pandemic chip crunch, it's not just leading edge chips that are made outside the US. This sort of blanket tariff represents a fundamental lack of understanding of the semiconductor industry.

Exactly this.

The cost to the US (and the world) of being driven into a recession far exceeds any longer term benefit the US could yield by these tariffs.

As for better ways of getting manufacturing moved back to the US, I agree. Sugar works better than a stick.

 

[Jozo035]

Clown show!

I know what You mean, Trump is too soft. Biden promised 100%. Even Ursula delivered 35% increase on "non-cooperating" firms.

https://edition.cnn.com/2024/09/13/politics/china-tariffs-biden-trump/index.html

 

[Paul2]

The problem in how people see it is that they don't know of intentionally open holes in the tariff fence, and this is why retail prices are not immediately impacted:

1. 2018 tariff exemptions are still in effect for large companies which managed to secure them, and they are quietly extended without press-releases.
2. US INTENTIONALLY does not take any action on transshipment
3. Many new exemptions which public doesn't know about
4. Removal of the deminimus limit shifts profits enormously to Amazon, and larger importers.

So Trump's goal is to sound as loud and scandalous as possible, while trying to keep influence of his actions to the minimum.

The side effects:

1. Companies with 2018 exemptions are grossly profiting off their exemptions, especially in low-end goods, where import cost really matters.
2. By encouraging mainland Chinese learn how to fraud US customs system, Trump sets the trap for himself — which one, guess yourself. Once you understand, you will laugh to heavens

 

[DanX]

If this is true, Canada has the chance to be the data center of the world.

 

[Barnsley]

If this is true, Canada has the chance to be the data center of the world.

Natural climactic controls probably save some money!!