US Launches Tariff Investigations into Chips and Pharmaceuticals

Post by: Pratik Kumar

Photo : Reuters

The Trump administration is moving forward with plans to add more tariffs on some important products. They have started looking into imports of computer chips, the equipment needed to make them, and pharmaceuticals (medicines and their ingredients).

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On Monday, the U.S. Department of Commerce made an announcement about these investigations. They put up notices on the Federal Register, which is a public record, asking people to share their thoughts within the next three weeks. Last week, President Trump had paused most of his tariff increases for 90 days, except for tariffs on products from China. However, he has said that he still plans to add tariffs on medicines, wood, copper, and computer chips.

The Commerce Department is looking into how imports of computer chips, the equipment to make them, and items that use these chips—like cars, refrigerators, and smartphones—affect the security of the United States. The government can use a law called Section 232 of the Trade Expansion Act from 1962 to place tariffs for national security reasons.

The investigation will also look into whether the U.S. can make enough computer chips on its own and what role foreign countries play in making and testing these chips. It will also check if it is risky to have most chip production done in other countries, and how things like unfair trade practices and government subsidies in other countries affect the U.S.

Commerce Secretary Howard Lutnick explained that products like medicines, semiconductors (computer chips), and cars will be handled separately. He said that these products are too important for the U.S. to rely on other countries for, and the U.S. needs to make them at home.

The investigation into pharmaceuticals (medicines) is about the ingredients that are used to make the medicines. More than 70% of these ingredients are made in other countries, like India, China, and the European Union. Even though the U.S. makes a lot of the world’s medicines, it uses almost half of the world’s total amount of medicines, more than any other country.

The U.S. also makes semiconductors (computer chips), but it still depends a lot on imports for some advanced chips. For example, Taiwan makes most of the advanced computer chips, and South Korea makes a smaller share. Products like smartphones, laptops, and other electronics made in countries like China are big parts of U.S. imports. The Trump administration says that these electronics will still be taxed under old tariffs and could even have new, extra tariffs added.

Even though big chip makers like Taiwan Semiconductor Manufacturing Company are putting money into making chips in the U.S., it will take a long time and a lot of money to set up the supply chains needed to make everything in the U.S.

The Commerce Department also announced that it is ending a 2019 deal that kept an investigation into tomato imports from Mexico on hold. The U.S. says the current deal is not protecting U.S. tomato farmers from unfairly priced tomatoes. As a result, most tomatoes from Mexico will have a 20.91% tariff placed on them in 90 days.

This is all part of President Trump’s efforts to make sure the U.S. is more self-reliant and better protected against unfair trade from other countries.

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