Trump tariffs of 25% could apply as soon as April 2 to imports from three industries that are major contributors to the U.S. trade deficit: pharmaceuticals, autos and semiconductors. President Donald Trump's threat issued Tuesday puts yet another trade-war escalation date on the calendar, raising the already-massive stakes tied to the three tariff deadlines that were already fast approaching.
Trump told reporters at Mar-a-Lago that tariffs on these industries will be "in the neighborhood of 25%" and could "go substantially higher over the course of the year." Trump added that a phase-in period would give U.S. companies a chance to respond by boosting domestic production.
Four Tariff Trigger Dates
"It remains to be seen which of the floated tariffs will be implemented, but there are now many tariff spinning plates in play, " Deutsche Bank strategist Jim Reid wrote in a Wednesday note. Along with possible tariffs on autos, chips and prescription drugs on April 2, there are "reciprocal tariff investigations also due by early April, steel and aluminum tariffs due on March 12, and the one-month delay to tariffs on Canada and Mexico ending on March 4."
Trade Deficit Trio: Pharma, Autos, Chips
The U.S. trade deficit in pharmaceuticals surged to $139 billion in 2024 from $102 billion in 2023, Commerce Department data shows.
The U.S. ran a $305 billion deficit in autos, parts and engines last year, with a $155 billion deficit in passenger cars.
The trade gap in semiconductors doesn't stand out, amounting to $17 billion last year. However, that's because most semiconductors are already embedded in other technology products like servers, laptops and iPhones, when they arrive in the U.S. That highlights the logistical challenge of putting a value on the imported chips.
The U.S. is racing to build advanced chip manufacturing with the help of $100 billion in CHIPS Act funding, but it's a marathon, not a sprint. This year, a Taiwan Semiconductor plant that began construction in 2021 will begin production of the new Blackwell AI chip from Nvidia.
"I don't know how you balance not hurting U.S. industries involved with AI with an import tax," Robert Maire, president of consulting firm Semiconductor Advisors, told Investor's Business Daily. "It would be shooting ourselves in the foot to increase the cost of AI-related data centers and devices, as opposed to what it might cost in Europe and other countries, let alone China."
Trump Tariffs: Canada And Mexico
On Feb. 3, Trump announced a 30-day delay in tariffs targeting all imports from Mexico and Canada with a 25% rate, except for a 10% rate on energy imports from Canada.
The delay followed commitments by Mexico and Canada to stop drug smuggling across the border, part of Trump's justification in ordering the tariffs via the International Emergency Economic Powers Act. Yet the White House news release justified the tariffs on much different grounds: "Tariffs strengthen the American economy, raise wages, and create jobs."
Mexico and Canada together accounted for $918.5 billion in U.S. goods imports in 2024, or about 28% of the total. The integration of North American economies under NAFTA and then the renegotiated U.S.-Mexico-Canada Agreement under President Trump means that some goods cross the border more than once, before and after finished assembly.
The USMCA deal set new quotas of 2.6 million passenger vehicle imports to the U.S. apiece for Canada and Mexico. Above those levels, vehicle imports can't qualify for duty-free treatment. Yet the Trump tariffs, if they take effect, will hit all imports. Both Canada and Mexico are heading for recession if the tariffs are applied, economists say.
Ford Motor CEO Jim Farley told investors last week that 25% tariffs on imports from Canada and Mexico "would blow a hole in the U.S. industry that we've never seen."
Trump Tariffs: Steel And Aluminum
Trump signed an executive order on Feb. 10 that will subject all steel and aluminum imports, roughly $50 billion worth, to 25% tariffs, effective March 12.
Trump already imposed a 25% tariff on steel imports in 2018. However, most steel imports to the U.S. are shielded from this tax through a series of subsequent agreements with trading partners. Meanwhile the current 10% tax on aluminum imports is set to jump to 25%.
Trump Reciprocal Tariffs
Trump signed an executive order last Thursday designed to level the playing field with trade partners via what he terms "reciprocal" tariffs. In theory, the approach could offer other countries a way of avoiding the tariffs by simply bringing down their own trade barriers to U.S. products.
However, Trump doesn't want the tax to only reflect the import taxes other countries slap on imports from the U.S. Other factors, including government subsidies, value-added taxes and currency valuations will also factor into the U.S. tariff rate.
