PALM BEACH, Florida: U.S. President Donald Trump said on Tuesday he intends to impose auto tariffs "in the neighborhood of 25%" and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.

AI Brief
  • Trump plans to impose auto tariffs starting April 2, citing unfair foreign trade practices.
  • Additional 25% tariffs will target pharmaceuticals, semiconductor chips, steel, and aluminum imports.
  • A similar 25% auto tariff was considered in 2018-2019 but wasn't enacted.

On Friday, Trump 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.

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

The European Union, for instance, collects a 10% tariff on vehicle imports, four times the U.S. passenger car tariff rate of 2.5%. The U.S., though, collects a 25% tariff on imported pickup trucks from countries other than Mexico and Canada, a tax that makes the vehicles highly profitable for Detroit automakers.

PHARMA, CHIPS DUTIES

Trump told reporters on Tuesday that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at "25% 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 drug and chip makers to set up U.S. factories so that they can avoid tariffs.

Since his inauguration four weeks ago, Trump has imposed a 10% 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% tariffs on goods from Mexico and non-energy imports from Canada.

He has also set a March 12 start date for 25% tariffs on all imported steel and aluminum, eliminating exemptions for Canada, Mexico, the European Union 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.

SHELVED CAR TARIFFS

An auto import tariff of 25% 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% 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.