Trump's New Escalating Levies: Who Will Be Most Affected by Tariffs on Autos, Chips, and Pharmaceuticals?

TradingKey – Following the imposition of tariffs on steel and aluminum, President Trump announced on Tuesday that he will reveal his tariff plans for automobiles, chips, and pharmaceuticals on April 2nd. This marks a new escalation in the ongoing trade war.

On Tuesday, February 18th, US President Donald Trump stated that he might impose a 25% tariff on automobiles, with further details to be announced by April 2.

Meanwhile, semiconductor chips and pharmaceuticals are also on the tariff list. Trump mentioned that the tax rate could reach 25% or even higher, and it would increase significantly within a year.

The Far-reaching Impact of Automobile Tariffs

In 2024, the United States imported about 8 million passenger cars and light trucks, accounting for half of total US automobile sales.

Analysts point out that automobile tariffs will negatively impact automakers in Mexico, Canada, Japan, and South Korea.

In Japan's case, 28.3% of its total exports to the United States in 2024 were automobiles. When auto parts are included, the proportion exceeds one-third— the highest among all countries.

Japan may be directly affected by automobile export tariffs and also indirectly impacted by higher tariffs on imports from Mexico and Canada, as Japanese automakers have established factories in these two countries.

Semiconductor Tariffs May Backfire

Analysts believe that Trump's semiconductor tariff measures will hit major semiconductor-producing countries such as Japan and South Korea. Taiwanese factories, including TSMC, will also be significantly affected.

Studies indicate that the cost of building and operating semiconductor factories in the United States (over a 10-year period) is about 30% higher than that of Asian competitors.

Industry insiders note that economic sanctions will not quickly promote the development of the US chip manufacturing industry, and the increased costs will ultimately be passed on to US consumers.

Bob O'Donnell, an analyst at TECHnalysis Research, said that the Trump administration's attempt to impose tariffs on chips reflects a lack of understanding of the semiconductor industry's operations.

Such a measure will be "short-sighted." It will not weaken Taiwan's leadership in advanced chip manufacturing, but instead raise chip costs, causing a massive negative impact on the entire industry.

Bob mentioned that this will harm US technology companies, which are heavily dependent on Taiwanese chip manufacturers, such as Apple, Nvidia, Qualcomm, Intel, and AMD.

Pharmaceutical Tariffs May Jeopardize US Public Health

India, a major producer of generic drugs, and Switzerland, home to leading pharmaceutical companies, may be the biggest "victims" of the new levies on pharmaceutical drugs.

While Trump's tariffs aim to prevent fentanyl and other drugs from entering the United States, high tariffs could exacerbate drug shortages in the US and endanger public health.

John Murphy, CEO of the Association for Accessible Medicines, said that the global supply chain for generic drugs and biosimilars is crucial for US patients. From basic ingredients to finished products, US medicines rely on a global supply chain that is already overburdened.

An assistant professor at Georgetown University School of Health added that millions of Americans rely on generics, antibiotics, and antivirals for critical conditions, with China being one of the primary suppliers of these products. Therefore, it is not just important for the economy, but for patients and public health.