Tariffs Loom as US Investigates Drug and Chip Imports
The Trump administration is advancing investigations into pharmaceutical and semiconductor imports, citing national security concerns—paving the way for new tariffs aimed at reducing reliance on foreign suppliers in critical sectors.
According to filings published in the Federal Register on Monday, the administration is invoking Section 232 of the Trade Expansion Act of 1962 to justify the move. This provision allows for sector-specific tariffs intended to strengthen domestic manufacturing of goods deemed vital to national security.
The announcement also triggers a 21-day public comment period and marks President Donald Trump’s latest use of the trade law as part of his broader push for economic self-sufficiency.
The investigations follow recent exclusions from Trump’s 125% reciprocal tariffs for smartphones, computers, and other electronics—primarily imported from China. Officials had previously indicated these products could soon be subject to Section 232 duties. Under the law, such investigations must be completed within 270 days of their launch.
Although pharmaceuticals and semiconductors were initially exempt from the baseline tariffs introduced on April 5, Trump has confirmed they will face separate levies. He stated over the weekend that tariffs on imported chips would be announced within the week, with some flexibility for companies in the sector.
The US remains heavily reliant on semiconductors from Taiwan—a dependency former President Joe Biden attempted to reduce through large-scale incentives under the CHIPS Act to encourage domestic production. The new investigations will cover not only finished pharmaceuticals, but also active pharmaceutical ingredients and related products.
Pharmaceutical companies have warned that tariffs could lead to medicine shortages and reduced patient access. However, Trump argues that increasing domestic drug manufacturing is essential for national security. The industry is urging a phased introduction of the tariffs to soften their impact and allow time to adapt operations. Major pharmaceutical firms, with manufacturing spread across the US, Europe, and Asia, face a costly and lengthy process in shifting more production to the United States.
“This notice gives us some breathing room and visibility on when the tariffs might be expected, and we will certainly be watching for lobbying efforts from PHRMA and industry CEOs over the next three weeks,” said Bernstein analyst Courtney Breen. “We are bracing for an announcement of tariffs around mid-May and see tariffs of 10–25% as possible, with the industry pushing for a gradual implementation and potential exemptions.”
Trump’s broad use of tariffs has previously unsettled financial markets and led economists to revise their forecasts for the US economy. Most major US stock indices are now down more than 10% from the highs reached following his re-election.
Reuters
