New Tariff Measures Spark Global Concern

President Donald Trump has introduced a new wave of tariffs on various imported goods, including 100% duties on branded drugs and 25% levies on heavy-duty trucks. These measures are set to take effect next week, marking another step in the administration’s strategy to protect U.S. manufacturing and national security.

This latest move follows previous sweeping tariffs on trading partners, some reaching up to 50%, and targeted levies on products like steel. The impact of these tariffs has been significant, casting a shadow over global economic growth and disrupting business decision-making worldwide. Additionally, the Federal Reserve has noted that these tariffs are contributing to higher consumer prices in the United States.

Trump announced the new tariffs on Truth Social without specifying whether they would be added on top of existing national tariffs. However, recent trade deals with Japan, the European Union, and the United Kingdom include provisions that cap tariffs for specific products like pharmaceuticals.

Japan is currently analyzing the potential effects of the new measures, while Australia has labeled them as “unfair” and “unjustified.” Trump also fulfilled a promise to revive America’s furniture industry by imposing a 50% tariff on imported kitchen cabinets and bathroom vanities and a 30% tariff on upholstered furniture. All these new duties will come into effect from October 1.

“The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside Countries,” Trump stated.

Impact on Stock Markets and Industries

Pharmaceutical companies across Asia experienced a decline in stock values following the announcement. For instance, Australia’s CSL hit a six-year low, Japan’s Sumitomo Pharma dropped more than 3%, and pharmaceutical indices in Hong Kong and India fell by over 1%. Similarly, an index tracking Chinese-listed furniture makers also decreased by approximately 1%.

These new actions are part of the Trump administration’s effort to rely on more established legal authorities for its tariff actions, given the ongoing risks associated with a case before the Supreme Court regarding the legality of his sweeping global tariffs.

The new 100% tariff on any branded or patented pharmaceutical product will apply to all imports unless the company has already started building a manufacturing plant in the United States. The Pharmaceutical Research and Manufacturers of America, an industry group, expressed concerns that these tariffs could jeopardize hundreds of billions in new U.S. investments.

Expansion of Tariff Investigations

The Trump administration has initiated a dozen investigations into the national security implications of importing wind turbines, airplanes, semiconductors, polysilicon, copper, timber, lumber, and critical minerals. These investigations aim to form the basis for new tariffs. Additionally, Trump announced new probes into personal protective equipment, medical items, robotics, and industrial machinery.

Previously, the administration had imposed national security tariffs on steel and aluminum, derivatives, light-duty autos and parts, and copper. These measures have become a key foreign policy tool, used to renegotiate trade deals, extract concessions, and exert political pressure on other countries.

Trade Deals and Potential Reprieves

Some economies that have already struck deals may benefit from a reprieve on the latest duties. For example, the EU’s deal with the U.S. stipulates a 15% tariff on goods including pharmaceuticals, while Japan has an agreement that its tariff rates will not exceed others, including those of the EU. Tokyo’s trade negotiator, Ryosei Akazawa, mentioned that the country is still assessing how the new measures relate to their existing agreements.

In Australia, Health Minister Mark Butler stated that the government is working to understand the implications of the new “unfair, unjustified tariffs” after 20 years of free trade. According to a U.S. pharmaceutical trade group, more than half of the $85.6 billion in ingredients used in medicines consumed in the United States are manufactured in the U.S., with the remainder coming from Europe and other U.S. allies.

Furniture Imports and Industry Reactions

Imports of furniture to the United States reached $25.5 billion in 2024, an increase of 7% compared to the previous year. About 60% of these imports came from Vietnam and China, according to Furniture Today, a trade publication. Nguyen Thi Thu Hoai from the Wood and Handicraft Association of Dong Nai province expressed shock at the news, calling the decision on the additional tariff “unfair.”

Trump had previously promised to impose new furniture tariffs, claiming it would bring the furniture business back to North Carolina, South Carolina, and Michigan. However, employment in the U.S. furniture and wood products manufacturing sector has halved since 2000, reaching around 340,000 today.

Inflation and Transportation Costs

Higher tariffs on commercial vehicles could increase transportation costs during a period when Trump has vowed to reduce inflation, particularly on consumer goods such as groceries. Trump stated that the new heavy-duty truck tariffs were intended to protect manufacturers from “unfair outside competition” and would benefit companies like Paccar-owned Peterbilt and Kenworth and Daimler Truck-owned Freightliner.

The U.S. Chamber of Commerce had previously urged the department not to impose new truck tariffs, highlighting that the top five import sources—Mexico, Canada, Japan, Germany, and Finland—are allies or close partners of the United States, posing no threat to U.S. national security. Mexico, the largest truck exporter, has opposed the new tariffs, arguing that Mexican trucks exported to the U.S. have on average 50% U.S. content, including diesel engines. Companies like Chrysler-parent Stellantis produce trucks in Mexico.

Last year, the U.S. imported almost $128 billion in heavy vehicle parts from Mexico, accounting for approximately 28% of total U.S. imports in the category, according to Mexico.

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