Trump threatens tariffs on pharma, chips as trade war widens

US President Donald Trump Signals Up to 250 Percent Tariffs on Pharmaceuticals

In an interview on CNBC, President Donald Trump revealed that the U.S. could impose tariffs as high as 250 percent on imported pharmaceuticals, beginning with a small initial duty.

Timeline of the Proposed Tariffs

• Initial low tariff: Trump announced a modest entry tariff on pharmaceutical imports.
• Ramp‑up in 1‑1.5 years: He expects the duty to increase to 150 percent within the first year and one half.
• Maximum 250 percent: After that period, the tariff would reach the maximum of 250 percent, aimed at encouraging locally manufactured drugs.

Expansion to Semiconductor Duties

Trump indicated that the U.S. will also announce tariffs on foreign semiconductors and chips in the next week or so.

Impact on Global Trade Partners

Trump’s aggressive tariff policy could have profound repercussions for economies worldwide, particularly in Switzerland.

Swiss Negotiations

• Swiss leaders in Washington: Swiss officials visited Washington on Tuesday to avert punitive duties, hoping to keep a 39 percent tariff on imports under the threshold.
• Exclusion of pharmaceuticals: The current Swiss tariff plan excludes pharma, making the U.S. plan for a steep pharma levy a contentious point.
• Swiss exports to the U.S.: Pharmaceuticals accounted for 60 percent of Swiss goods exports last year.

Additional U.S. Duties on Other Products

• Steel and aluminum: Trump has already imposed 50 percent duties on imports of steel and aluminum.
• Automobiles and parts: Lower levels of tariffs apply to automotive sectors.

U.S. Tariffs on Indian Imports

Trump also warned that he expects to raise the U.S. tariff on Indian imports very substantially over the next 24 hours, citing India’s purchase of Russian oil, a critical revenue source for Moscow’s military offensive on Ukraine.

Russia and U.S. Diplomatic Tensions

• Sanctions on Moscow: Trump has signaled fresh sanctions on Moscow if the Kremlin does not progress toward a peace deal with Kyiv by Friday.
• Kremlin’s criticism: The Kremlin has criticized Trump’s threat of raising tariffs on Indian goods.
• Upcoming talks: Moscow is anticipating talks this week with U.S. special envoy Steve Witkoff.

Economic and Employment Concerns

Weak employment data last week highlighted challenges for the U.S. economy, as companies adopt a cautious approach in hiring and investment while grappling with Trump’s radical and rapidly changing tariffs policy.

Inflation Risks and Global Fallout

Trump’s approach demonstrates raw economic power aimed at placing U.S. exporters in a stronger position while encouraging domestic manufacturing by keeping out foreign imports. However, the approach has raised fears of inflation and other economic fallout in the world’s largest economy.