On Thursday, US President Donald Trump introduced a new round of stringent tariffs on a wide array of imported goods. This includes 100% duties on branded pharmaceuticals and 25% tariffs on heavy-duty trucks, which are set to be implemented next week.
Throughout Trump’s second term, tariffs have been prominent, with comprehensive duties on trading partners ranging from 10% to 50% and specific levies on various products. This has cast uncertainty over the global economic landscape and stalled corporate decision-making.
Announced on Truth Social, the new tariffs do not clarify whether they are in addition to existing national tariffs or if countries with trade agreements, like the European Union and Japan, would be exempt.
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Additionally, Trump announced a 50% tariff on kitchen cabinets and bathroom vanities and a 30% tariff on upholstered furniture, effective from October 1.
“The reason for these tariffs is the massive influx of these products into the US from foreign countries,” Trump stated on Truth Social regarding household goods tariffs.
In response, stocks of pharmaceutical companies across Asia dropped, with Japan’s Sumitomo Pharma falling by 4.3% and Australia’s CSL hitting a six-year low.
An index tracking Chinese-listed furniture manufacturers also fell by 1.1%.
These measures are seen as part of the Trump administration’s move towards more established legal grounds for tariff actions, considering the risks linked to a Supreme Court case on the legality of his extensive global tariffs.
The new 100% tariff on any branded or patented pharmaceutical product will apply to all imports unless the company has begun building a manufacturing plant in the US, Trump indicated.
The Pharmaceutical Research and Manufacturers of America, an industry group, mentioned that companies “continue to announce hundreds of billions in new US investments. Tariffs jeopardize those plans.”
The Trump administration has launched several investigations into the national security implications of imports of items like wind turbines, airplanes, semiconductors, and critical minerals to establish grounds for new tariffs.
This week, Trump announced new investigations into personal protective equipment, medical items, robotics, and industrial machinery.
Foreign Policy Tool
Trump has utilized tariffs as a significant foreign policy tool to renegotiate trade deals, extract concessions, and exert political pressure on other nations. His administration has highlighted tariffs as a major revenue source, with Treasury Secretary Scott Bessent stating Washington could collect $300 billion by year’s end.
Previously, Trump imposed national security tariffs on steel, aluminum, light-duty vehicles, and copper.
The trade agreements between the Trump administration and Japan, the EU, and the UK include clauses that limit tariffs for certain products, like vehicles, semiconductors, and pharmaceuticals, meaning the new higher national security tariffs likely won’t exceed the agreed rates.
Trump mentioned the new heavy-duty truck tariffs aim to protect manufacturers from “unfair foreign competition,” benefiting companies like Paccar-owned Peterbilt and Kenworth and Daimler Truck-owned Freightliner.
The US pharmaceutical trade group reported that 53% by value of the $85.6 billion in ingredients used in US-consumed medicines is manufactured domestically, with the remainder from Europe and other US allies.
The US Chamber of Commerce previously urged against new truck tariffs, noting the top five import sources—Mexico, Canada, Japan, Germany, and Finland—are allies or close partners posing no threat to US national security.
Mexico is the largest exporter of medium- and heavy-duty trucks to the US. A study from January indicated imports of these larger vehicles from Mexico have tripled since 2019.
In August, Trump promised new furniture tariffs, asserting it “will revitalize the furniture industry in North Carolina, South Carolina, and Michigan.”
According to government statistics, US employment in furniture and wood products manufacturing has halved since 2000 to around 340,000 today.
The US imported roughly $25.5 billion in furniture in 2024, a 7% increase from 2023, with about 60% of these imports coming from Vietnam and China, as reported by Furniture Today, a trade publication.
Inflation Concerns
Higher tariffs on commercial vehicles might increase transportation costs, even as Trump has pledged to reduce inflation, especially for consumer goods like groceries.
Tariffs could also impact Chrysler-parent Stellantis, which produces heavy-duty Ram trucks and commercial vans in Mexico. Sweden’s Volvo Group is constructing a $700 million heavy-truck plant in Monterrey, Mexico, set to begin operations in 2026.
Mexico hosts 14 manufacturers and assemblers of buses, trucks, and tractor trucks, and two engine manufacturers, according to the US International Trade Administration.
The country is the world’s leading exporter of tractor trucks, with 95% destined for the US.
Mexico opposed the new tariffs, informing the Commerce Department in May that on average, Mexican trucks exported to the US contain 50% US content, including diesel engines.
Last year, the US imported nearly $128 billion in heavy vehicle parts from Mexico, representing about 28% of total US imports, according to Mexico.
The Japanese Automobile Manufacturers Association also opposed new tariffs, noting Japanese companies have reduced exports to the US as they have increased US production of medium- and heavy-duty trucks.
