Donald Trump said on Tuesday he intends to impose auto tariffs “in the neighbourhood of 25 per cent,” with similar duties on semiconductors and pharmaceutical imports. It’s the latest in a series of measures threatening to upend international trade by the U.S. president.
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 railed against what he calls the unfair treatment of U.S. automotive exports in foreign markets.
The European Union, for instance, collects a 10 per cent duty on vehicle imports, four times the U.S. passenger car tariff rate of 2.5 per cent. The U.S., though, collects a 25 per cent tariff on pickup trucks from countries other than Mexico and Canada, a tax that makes the vehicles highly profitable for Detroit automakers.
EU trade chief Maros Sefcovic will meet with U.S. counterparts — Commerce Secretary Howard Lutnick, Trump’s nominee to be U.S. Trade Representative Jamieson Greer and National Economic Council director Kevin Hassett — in Washington on Wednesday to discuss the various tariffs threatened by Trump.
Asked whether the EU could avoid reciprocal tariffs he proposed last week, Trump repeated his claim that the EU had already signaled it would lower its tariffs on U.S. cars to the U.S. rate, although EU lawmakers have denied doing so.
He said he would press EU officials to increase U.S. imports of cars and other products.
Pharmaceuticals and semiconductor chip duties
Trump told reporters at his Mar-a-Lago estate in Florida on Tuesday that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at “25 per cent or higher,” rising substantially 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.
Trump said he expected some of the biggest companies in the world to announce new investments in the United States in the next couple of weeks. He provided no further details.
Since his inauguration four weeks ago, Trump has imposed a 10 per cent 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 per cent tariffs on goods from Mexico and non-energy imports from Canada.
He has also set a March 12 start date for 25 per cent 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 per cent 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 per cent 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.
