The Blubber

Trump Eyes New 25% Tariffs on Cars, Chips, and Pharmaceuticals

President Donald Trump signaled he is likely to impose 25% tariffs on imported automobiles, semiconductors, and pharmaceuticals, with an official announcement expected as soon as April 2. The move would dramatically escalate Trump’s ongoing trade war.

Expanding Trade Barriers

Trump previously imposed 25% tariffs on steel and aluminum, set to take effect in March. His latest comments mark the most specific indication yet of his intent to broaden trade restrictions to other key industries.

“I probably will tell you that on April 2, but it’ll be in the neighborhood of 25%,” Trump said at Mar-a-Lago when asked about auto tariffs.

Asked whether similar levies would apply to pharmaceuticals and semiconductor chips, Trump responded:

“It’ll be 25% and higher, and it’ll go substantially higher over a course of a year.”

He added that companies will have time to establish production in the U.S. before the tariffs take effect:

“When they come into the United States and they have their plant or factory here, there is no tariff, so we want to give them a little bit of a chance.”

Impact on the Auto Industry

A 25% tariff on imported vehicles would have major consequences. Nearly 8 million cars and light trucks were imported into the U.S. last year—accounting for half of all U.S. vehicle sales.

• European automakers like Volkswagen and Asian manufacturers like Hyundai would be among the hardest hit.
• Morningstar analyst Rella Suskin warned that European carmakers would struggle to pass the costs onto consumers or absorb them due to thin profit margins.

Trump did not specify whether the tariffs would apply to all imported vehicles or target specific countries. It’s also unclear if cars produced under free trade agreements with Canada and Mexico would be spared.

Market Reaction and Global Impact

• U.S. stock markets dipped Wednesday following the news.
  • The S&P 500 fell from a record high.
  • Jeep-owner Stellantis NV dropped 2%.
  • General Motors slid 1%, while Ford declined less than 1%.
• The trade measures are expected to impact not just China but also other Asian economies.
  • Mexico and South Korea—which export cars to the U.S. worth 2.4% and 1.8% of their GDP, respectively—could be among the most affected.
  • Malaysia and Singapore, both major semiconductor exporters, also face risks.

Trump’s latest tariff threat lands just hours after Singapore announced plans to invest S$1 billion ($744.8 million) into a new semiconductor R&D facility as part of its national budget.

With the scope of Trump's trade war expanding, global markets are bracing for further disruptions.