Donald Trump's administration is initiating investigations into imposing tariffs on imported microprocessors and pharmaceuticals, aiming to bolster domestic production and national security. These probes follow a 90-day pause on reciprocal tariffs, and although some companies may see flexibility, the tariffs, if implemented, are expected to be substantial, potentially reaching 25%.
The investigation into microprocessors considers various aspects, such as the current and projected demand, domestic production capacity, foreign supply risks, economic impacts, and the possibility of foreign export restrictions. The aim is to assess the effects of semiconductor imports on national security. The US currently produces around 10% of the world's chips, highlighting its heavy reliance on imports.
The investigation into pharmaceuticals encompasses generic and non-generic products, active ingredients, and related items. It will analyze import tariff effects, supply concentration, domestic demand, and US production capacity. Despite potential drug shortages and reduced patient access, Trump is pushing for these tariffs to lessen the country's reliance on foreign pharmaceutical suppliers. Major pharmaceutical companies are already investing in US production in anticipation of these potential tariffs.
The investigations are based on Section 232 of the Trade Expansion Act of 1962, requiring completion within 270 days. While the timeframe for implementing protective measures isn't specified, the administration intends to use this section to levy tariffs or quotas. Concerns have been raised regarding the potential impact on drug access and the years-long process of shifting production to the US.