Trump slaps steep US tariffs on drugs, heavy trucks and furniture

The latest salvo, which Trump said was to protect the U.S. manufacturing industry and national security, follows wide-ranging duties on trading partners of up to 50% and other targeted levies on imported products such as steel and autos.

Trump's announcement on Truth Social of the steep duties that go into effect on Wednesday shattered a relative lull in his tariff assault on global trading partners, throwing new obstacles at businesses already struggling with disrupted supply chains, soaring costs and consumer uncertainty.

His new duties included a 50% tariff on imported kitchen cabinets and bathroom vanities, as well as a 30% levy on upholstered furniture, raising costs for a core consumer sector.

The barrage has cast a pall over global growth, while the Federal Reserve has said it is also contributing to higher U.S. consumer prices.

QUESTIONS OVER TRADE DEAL CAPS

Trump's administration pressed forward over the summer with trade deals to ease tariffs for some key partners, including Japan, the European Union and South Korea.

Questions swirled on Friday whether these would protect countries from the higher sectoral tariffs.

A White House official said the administration would honor 15% caps on tariffs for imported pharmaceuticals under patent for countries with trade deals that specified such reductions.

Deals with the EU and Japan specify protections for drugs, semiconductors and autos, but no documents have been issued for a South Korean trade deal, leaving its cars still subject to a 27.5% total U.S. tariff.

There were no explicit trade deal provisions to cap tariffs for heavy trucks or furniture for any trading partners.

Britain reached the first trade deal with Trump in May for a 10% base tariff rate, but it did not specify pharmaceuticals duties. Branded drugs from Britain would be subject to the full 100% duty, sources familiar with Trump's tariff plans said.

British officials were pushing for reductions, and the Financial Times reported that they planned to offer to raise the amount Britain's National Health Service pays for drugs as a concession.

TRADE LAW SUBSTITUTION

The latest tariffs fall under the Section 232 national security trade statute, part of Trump's shift to rely on more established trade laws. The Supreme Court is due to rule on the legality of his broader "reciprocal" tariffs, which two lower courts have struck down.

The Commerce Department on Wednesday announced two new Section 232 investigations expected to add new tariffs to industrial machinery, robotics, medical equipment and personal protective gear.

These add to several others under way covering broad swathes of the U.S. economy: semiconductors and devices using them; commercial aircraft and jet engines; unmanned aerial vehicles; wind turbines; polysilicon and solar products; and processed critical minerals.

U.S. and European pharmaceutical stocks mostly held firm after Trump's announcement, but U.S. stocks were largely flat amid mixed data showing higher inflation and stronger-than-expected consumer spending.

BMO Economics said in a note that investors appeared to be largely shrugging off the latest Trump tariff, adding: "Until the U.S. economy shows more signs of stress from the trade war, investors seem content to keep calm and carry on."

Claudio Feltrin, chairman of Italian furniture industry association FederlegnoArredo, said he feared the tariffs could trigger a flood of imports from China and other exporters seeking alternative markets.

DRUGMAKERS HAVE BEEN BRACING FOR TARIFFS

Trump said the 100% tariff on branded drugs would only apply to producers that had not already broken ground on U.S. manufacturing plants.

Many drugmakers have announced multibillion-dollar investments in the United States, and Switzerland's Roche Sunderlined on Friday that one of its U.S. units recently started work on a new facility.

Rival Novartis, which has also made a large U.S. investment pledge, did not reply to a request for comment.

More than half of the US$85.6 billion in ingredients for medicines used in the U.S. are manufactured domestically, with the remainder from Europe and other U.S. allies, the U.S. pharmaceutical trade group said earlier this year.

About 60% of the US$25.5 billion in U.S. furniture imports in 2024 came from Vietnam and China, according to Furniture Today, a trade publication.

"Many of our members were shocked when we heard the news. I think the decision on the additional tariff is unfair," said Nguyen Thi Thu Hoai from the Wood and Handicraft Association of Dong Nai province, one of Vietnam's largest furniture clusters.

Furniture and wood products manufacturing employment in the U.S. has halved since 2000 to around 340,000 today, according to government statistics.

Higher tariffs on commercial vehicles could put pressure on transportation costs just as Trump has vowed to reduce inflation, especially on consumer goods such as groceries.

Trump said the new heavy-duty truck tariffs would benefit companies such as Paccar-owned Peterbilt and Kenworth and Freightliner.

Shares of German truck makers Daimler Truck and Traton fell on news of the levies.