Trump ramps up commerce conflict discuss floating concept he’ll usher in 25% tariffs on imported vehicles, prescription drugs and chips

President Donald Trump has ramped up trade war fears after revealing he plans to impose 25 per cent tariffs on imported cars, pharmaceuticals and semiconductor chips.

Trump has long railed against what he calls the unfair treatment of US automotive exports in foreign markets and last Friday vowed to impose levies ‘in the neighborhood of 25 per cent’ on imported vehicles.

He then revealed Tuesday at his Mar-a-Lago estate in Florida that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at ’25 per cent or higher’, rising substantially over the course of a year. 

Trump said the automotive tariffs could 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. 

He did not provide a date for announcing the pharma and tech industry duties, and said he wanted to provide some time for drug and chip makers to set up US factories so that they can avoid tariffs. 

Trump said he expected some of the biggest companies in the world to announce new investments in the US in the next couple of weeks. He provided no further details. 

Trump said that tariffs on the automobile industry will ‘be in the neighborhood of 25 percent,’ with specifics to come around April 2.

Asked about threatened tariffs on pharmaceuticals and chips, Trump said: ‘It’ll be 25 percent and higher, and it’ll go very substantially higher over (the) course of a year.’

He added he wanted to give affected companies time to bring their operations to the US, saying that he had been contacted by major firms that ‘want to come back’.

The president also said that Washington’s trading partners could avoid being taxed by investing in factories in the US.

‘We want to give them time to come in,’ he said. ‘When they come into the United States and they have their plant or factory here, there is no tariff. So we want to give them a little bit of a chance.’

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 Trump’s tariff drama.

A similar drama played out in 2018 and 2019 during 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. 

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. 

Experts have warned it is often Americans who end up paying the cost of tariffs on imports, rather than foreign exporters.

About 50 per cent of the cars sold in the US are manufactured within the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany, also major suppliers.

Trump has long claimed that there is an unfair treatment of American automotive exports in foreign markets.

The European Union, for instance, collects a 10 per cent duty 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 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 will meet with American counterparts – Commerce Secretary Howard Lutnick, Trump’s nominee to be US Trade Representative Jamieson Greer and National Economic Council director Kevin Hassett – in Washington on Wednesday to discuss the various tariffs threatened by Trump.

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

Trump, who said he was pleased to see the EU ‘reduce their tariffs on cars to the level we have’, claimed he would press European officials to increase US imports of cars and other products.

‘The EU had 10 percent tax on cars and now they have a 2.5 percent tax, which is the exact same as us… If everybody would do that, then we’d all be on the same playing field,’ he said.

‘The EU has been very unfair to us. We have a trade deficit of $350billion, they don’t buy our cars, they don’t take our farm products, they don’t take almost anything… and we’ll have to straighten that out,’ he added.

Since his inauguration four weeks ago, Trump has announced a broad range of levies on some of the biggest US trading partners, arguing that they will help tackle unfair practices – and in some cases using the threats to influence policy.

He imposed a 10 per cent tariff on all imports from China, on top of existing levies, over China’s failure to halt fentanyl trafficking. 

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

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

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

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