Applied Tariffs May Not Cover Auto, Pharma, and Semi Sectors as Initially Speculated on April 2
Reduced scope of U.S. tariffs may materialize sooner than anticipated, around April's beginning. - Potential U.S. tariffs in April could be less expansive than initially projected
Unlike the initial rumors, the upcoming tariffs might miss the mark for industries like automobiles, pharmaceuticals, and semiconductors.
Several media sources, including Bloomberg, the Wall Street Journal, and AFP, suggested that the tariffs would be more selective and potentially exclude certain countries or groups entirely.
President Trump had hinted towards global industries like the auto, pharma, and semiconductor sectors, raising an alarm for potential widespread tariffs starting April 2nd. These reciprocal tariffs are meant to impose similar levies on imported products that correspond to those applied to similar goods inside the US. However, the US government intends to factor in other considerations such as non-tariff trade barriers (e.g., subsidies or regulations) in its assessments.
Despite this uncertainty, US markets reacted optimistically at market opening on Monday, with the Dow Jones Industrial Average climbing by 1.2%, and the Nasdaq Technology Index gaining approximately 1.9%.
In recent weeks, Trump's aggressive tariff policies have weighed negatively on US stock prices, as he has imposed or hinted at numerous tariffs, while also suspending a few of them without further ado. Often, he has used these tariffs as a bargaining chip against other countries.
Upcoming talks between EU Trade Commissioner Maros Sefcovic and US officials could further clarify pending tariffs. In mid-March, US tariffs of 25% on steel and aluminum products kicked into effect; these marked the first tariffs of Trump's second term that directly impacted EU member states. Originally, retaliatory tariffs from the EU were set to go into effect on April 1st but were later postponed by two weeks.
Automobile tariffs are still up in the air, with President Trump aiming to announce them soon, possibly before April 2nd. Although the specifics about exemptions or targeted countries remain foggy, it's worth noting that this industry relies heavily on imports from neighbouring countries like Mexico and Canada. Automakers have been actively investing in US production to prepare for potential ramifications.
Pharmaceutical tariffs are rumored for the coming weeks, but the exact schedule and scope are yet to be clarified. Such tariffs would go against the WTO's 1994 Agreement on Trade in Pharmaceutical Products, which aims to eliminate tariffs on most pharmaceutical goods. The pharmaceutical industry is heavily dependent on global supply chains, mainly from Europe; tariffs could lead to increased drug prices and exacerbate shortages.
Lastly, the details regarding tariffs on semiconductors are still unclear, with an announcement yet to be made. This critical industry is essential for technological advancements and any potential tariffs could bring about increased costs and disruptions to supply chains.
In summary, while the April 2nd deadline for tariffs looms, there's still considerable ambiguity regarding their scope and focus. The uncertainty surrounding these tariffs has already sparked economic unease and confused businesses and investors.
- The tariffs that could be implemented on the auto, pharma, and semiconductor sectors, as initially speculated on April 2, might be less comprehensive than expected, given the US government's intentions to factor in other considerations such as non-tariff trade barriers.
- Despite reports from media sources like AFP, Bloomberg News, and the Wall Street Journal suggesting that the upcoming tariffs would be more selective and potentially exclude certain countries or groups entirely, there is still ambiguity regarding the exact tariffs that US Customs could impose, particularly for the auto, pharma, and semiconductor industries.
- White House discussions with EU Trade Commissioner Maros Sefcovic could provide clarity on pending tariffs, including those for the auto, pharma, and semiconductor sectors, which are still up in the air, with auto tariffs rumored for the coming weeks and those for the pharma and semiconductor industries yet to be announced.
