President Trump’s latest round of tariff announcements have shaken markets again. First, he paused duties on certain consumer electronics.
Now he’s shifting his focus to pharmaceuticals and semiconductors – even if they’re embedded in imported goods like toys, cars, and electronics.
Tariffs on Chips and Drugs Back on the Table
Trump confirmed on Monday that fresh tariffs are being drawn up for semiconductors and drug imports.
“We don’t make our own drugs anymore,” Trump told reporters. “The drug companies are in Ireland, and they’re in lots of other places, like China,” he added. “All I have to do is impose a tariff… We’re going to be doing that.”
His aim, at least publicly, is to bring production home. The Department of Commerce has already launched investigations into national security risks tied to imported chips and pharmaceuticals. This move sets the stage for another wave of duties.
It’s not the first time this strategy has been used. Steel. Aluminum. Cars. Now medicine and microchips.
Mixed Messages on Tech Exemptions
Over the weekend, reports suggested that smartphones and computers had been spared. The clarity of that pause, though, didn’t last long.
Trump took to social media, writing that there were “no exceptions.” The White House later said the pause was temporary, allowing time to assess national security implications.
“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations,” Trump said in a social media post on Sunday.
Put simply, the electronics exemption came under reciprocal tariffs targeting consumer goods. However, upcoming chip tariffs are being justified on national security grounds (under Section 232 of the Trade Expansion Act), not as part of the retaliation cycle with China (
two different tariff streams).
So while phones and laptops got a temporary pass, the semiconductors inside them might still be hit, either directly or through new rules still in development.
Auto Parts
Auto parts may catch a break. Or not. That part’s still unclear… Trump’s stance on the issue remains a bit fluid.
According to Bloomberg, Trump told reporters that he’s “looking at something to help car companies,” adding: “They’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.”
Record-High Tariffs and Fresh Warnings
Right now, the U.S. tariff rate is between 22% and 27%. That’s the highest it’s been in more than a hundred years. Tariffs on Chinese goods alone have reached 145%. China hit back with duties of 125% on American products.
And the Federal Reserve is concerned. Governor Christopher Waller reportedly said that “growth could slow to a crawl.”
Fed Chair Jerome Powell had previously said this type of inflation would pass quickly. He’s less sure now. He recently admitted the effects “could be more persistent.”
Investments Announced, Skepticism Lingers
Some major companies have responded by announcing new U.S. projects.
TSMC plans to invest $100 billion in domestic chipmaking. Apple says it will spend $500 billion over four years to expand its U.S. footprint. Nvidia joined in too, with plans to build AI supercomputers entirely in the States. “The engines of the world’s AI infrastructure are being built in the United States for the first time,” said Jensen Huang, founder and CEO of NVIDIA. “Adding American manufacturing helps us better meet the incredible and growing demand for AI chips and supercomputers, strengthens our supply chain and boosts our resiliency.”
The White House credited the change in tone to recent policy moves.
“It’s the Trump Effect in action,” a White House press release read. “Onshoring these industries is good for the American worker, good for the American economy and good for American national security — and the best is yet to come.”
Still, not everyone’s convinced.
Ireland, home to nearly two dozen drug manufacturing sites, stands to lose a great deal.
US drugmakers rely heavily on those facilities. Bloomberg reports that firms like Merck and Pfizer could see disruption. There’s also concern within the biotech sector. Firms expect cost increases if the tariffs go through and some may need to rework supply chains entirely.
What Now?
The administration is exploring how to tax chips that are built into other goods, like toys, vehicles, or smart appliances. Officials admit it won’t be easy to implement, but say the issue is being reviewed.
Companies are guessing. And people are waiting to see if the next turn comes with a warning, or another twist.
A study from the Federal Reserve Bank of Boston found that many small and mid-sized businesses plan to pass the cost of tariffs directly to consumers. Most expect to do this gradually, over the next two years.
