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    Home » Trump Threatens 25% Auto Tariffs, Expands Trade War to Pharma and Chips

    Trump Threatens 25% Auto Tariffs, Expands Trade War to Pharma and Chips

    Kanika SharmaBy Kanika SharmaFebruary 19, 2025 Policy and Law No Comments3 Mins Read
    Trump

    Trump Plans 25% Tariffs on Autos, Pharmaceuticals, and Semiconductors

    US President Donald Trump announced on Tuesday his intention to impose tariffs of around 25% on automobile imports, as well as similar duties on pharmaceuticals and semiconductor chips. These measures, part of his broader effort to reshape global trade, could significantly impact international markets.

    Auto Tariffs Set for April

    Trump stated that auto tariffs could take effect as early as April 2, following the submission of reports by his cabinet members outlining tariff options. He has long argued that US automakers face unfair treatment in foreign markets, particularly in the European Union (EU), which imposes a 10% duty on vehicle imports—four times the 2.5% US tariff on passenger cars. However, the US already applies a 25% tariff on pickup trucks imported from countries outside North America, making them highly profitable for Detroit-based manufacturers.

    On Wednesday, EU trade chief Maros Sefcovic will meet with US officials, including Commerce Secretary Howard Lutnick, US Trade Representative nominee Jamieson Greer, and National Economic Council director Kevin Hassett, to discuss potential tariffs. Trump claimed the EU had agreed to lower its auto tariffs, though EU lawmakers have denied this.

    Tariffs on Pharmaceuticals and Semiconductor Chips

    Trump also revealed plans for sector-specific tariffs on pharmaceuticals and semiconductor chips, starting at 25% and increasing over time. He did not specify a start date but suggested companies could avoid tariffs by building factories in the US. He hinted that major corporations would soon announce new investments in the country but provided no further details.

    Expanding Trade Barriers

    Since taking office four weeks ago, Trump has imposed a 10% tariff on all Chinese imports, citing Beijing’s failure to curb fentanyl trafficking. He has also announced—though later delayed—25% tariffs on Mexican goods and non-energy imports from Canada.

    Additionally, a 25% tariff on all imported steel and aluminum is set to take effect on March 12, ending previous exemptions for key allies, including Canada, Mexico, and the EU. These tariffs will also apply to various downstream products made from steel and aluminum, such as electrical tubing and bulldozer blades.

    Last week, Trump directed his economic team to develop a plan for reciprocal tariffs, matching foreign tariff rates on a product-by-product basis.

    Renewed Auto Tariff Threats

    The idea of a 25% auto tariff is not new. During Trump’s first term, the Commerce Department conducted a national security review in 2018, concluding that auto imports weakened the domestic industrial base. While Trump had previously threatened similar tariffs, he ultimately let the authority to impose them expire. Some of the research from that probe may now be revisited as part of this renewed effort.

    With global markets already unsettled by trade uncertainties, Trump’s latest tariff plans could have far-reaching consequences for the auto, tech, and pharmaceutical industries.

    With inputs from Reuters

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    • Kanika Sharma
      Kanika Sharma

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