US Investigates Pharmaceutical and Semiconductor Imports

In a surprising move, the Trump administration has officially begun investigations into the imports of pharmaceuticals and semiconductors, with plans to impose tariffs on these crucial sectors under the guise of national security. This initiative, unveiled through notices set to appear in the Federal Register, marks a significant escalation in the ongoing trade strategy.

A Tight Timeline for Comments

According to the filings, the administration has established a 21-day window for public comment following the notice's publication. The goal is to expedite inquiries, which must be finalized within 270 days after their announcement.

Following in the Footsteps of Previous Tariff Actions

The Trump administration has a history of initiating investigations—232, to be exact—relating to imports of copper and lumber. These earlier inquiries formed the foundation for various tariffs implemented since Trump's return to the Oval Office, particularly on steel, aluminum, and the automotive industry.

Trump Sets His Sights on Semiconductors

Starting April 5, the US began levying a 10% tariff on several imports, but it notably excluded pharmaceuticals and semiconductors from these duties. However, Trump has openly declared plans for a separate tariff on imported semiconductors, promising details within the week. Interestingly, he hinted at offering some flexibility for certain companies in this sector.

The Semiconductor Dependency Dilemma

The US currently relies significantly on semiconductor imports, particularly from Taiwan. Former President Joe Biden attempted to shift this dependency by allocating billions in funds through the Chips Act to encourage domestic chip production.

Scope of the Investigation

The inquiry will encompass not only pharmaceuticals and their ingredients but also a range of derivative products. This expansion underscores the administration's commitment to reshaping America's manufacturing landscape.

Concerns from Drugmakers on Potential Shortages

There is growing concern among pharmaceutical companies that imposing tariffs could lead to drug shortages, ultimately harming patient access. Despite these worries, Trump argues that enhancing domestic drug manufacturing is vital to reduce reliance on foreign sources.

Industry Pushback and Future Manufacturing Plans

In response to the proposed tariffs, industry representatives have urged the Trump administration to phase in these fees gradually. This would allow companies the necessary time to adjust their manufacturing processes. As many large drugmakers already maintain global production capabilities, migrating more operations to the US is a complex and resource-intensive endeavor that could take many years to materialize.