Washington: President Donald Trump has said that he will put import taxes of 100 per cent on pharmaceutical drugs, 50 per cent on kitchen cabinets and bathroom vanities, 30 per cent on upholstered furniture and 25 per cent on heavy trucks starting October 1.
The posts on his social media site on Thursday showed that Trump’s devotion to tariffs did not end with the trade frameworks and import taxes that were launched in August, a reflection of the president’s confidence that taxes will help to reduce the government’s budget deficit while increasing domestic manufacturing.
While Trump did not provide a legal justification for the tariffs, he appeared to stretch the bounds of his role as commander-in-chief by stating on Truth Social that the taxes on imported kitchen cabinets and sofas were needed “for National Security and other reasons”.
Under the Trade Expansion Act of 1962, the administration launched a Section 232 investigation in April about the impacts on national security from pharmaceutical drug and truck imports. The Commerce Department launched a 232 investigation into timber and lumber in March, though it’s unclear whether the furniture tariffs stem from that.
The tariffs are another dose of uncertainty for the US economy with a solid stock market but a weakening outlook for jobs and elevated inflation. These new taxes on imports could pass through to consumers in the form of higher prices and dampen hiring, a process that economic data suggests is already underway.
“We have begun to see goods prices showing through into higher inflation,” Federal Reserve Chair Jerome Powell warned in a recent news conference, adding that higher costs for goods account for “most” or potentially “all” of the increase in inflation levels this year.
The president has pressured Powell to resign, arguing that the Fed should cut its benchmark interest rates more aggressively because inflation is no longer a concern. Fed officials have stayed cautious on rate cuts because of the uncertainty created by tariffs.
Trump said on Truth Social that the pharmaceutical tariffs would not apply to companies that are building manufacturing plants in the United States, which he defined as either “breaking ground” or being “under construction”. It was unclear how the tariffs would apply to companies that already have factories in the US.
In 2024, America imported nearly USD 233 billion in pharmaceutical and medicinal products, according to the Census Bureau. The prospect of prices doubling for some medicines could send shock waves to voters as health care expenses, as well as the costs of Medicare and Medicaid, potentially increase.
The pharmaceutical drug announcement was shocking as Trump has previously suggested that tariffs would be phased in over time so that companies had time to build factories and relocate production. On CNBC in August, Trump said he would start by charging a “small tariff” on pharmaceuticals and raise the rate over a year or more to 150 per cent and even 250 per cent.
According to the White House, the threat of tariffs earlier this year contributed to many major pharmaceutical companies, including Johnson & Johnson, AstraZeneca, Roche, Bristol Myers Squibb and Eli Lilly, among others, to announce investments in US production.
Pascal Chan, vice president for strategic policy and supply chains at the Canadian Chamber of Commerce, warned that the tariffs could harm Americans’ health with “immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or foregoing essential medicines”.
The new tariffs on cabinetry could further increase the costs for homebuilders at a time when many people seeking to buy a house feel priced out by the mix of housing shortages and high mortgage rates. The National Association of Realtors on Thursday said there were signs of price pressures easing as sales listings increased 11.7 per cent in August from a year ago, but the median price for an existing home was USD 422,600.
Trump said that foreign-made heavy trucks and parts are hurting domestic producers that need to be defended.
“Large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks, and others, will be protected from the onslaught of outside interruptions,” Trump posted.
Trump has long maintained that tariffs are the key to forcing companies to invest more in domestic factories. He has dismissed fears that importers would simply pass along much of the cost of the taxes to consumers and businesses in the form of higher prices.
His broader country-by-country tariffs relied on declaring an economic emergency based on a 1977 law, a drastic tax hike that two federal courts said exceeded Trump’s authority as president. The Supreme Court is set to hear the case in November.
The president continues to claim that inflation is no longer a challenge for the US economy, despite evidence to the contrary. The consumer price index has increased 2.9 per cent over the past 12 months, up from an annual pace of 2.3 per cent in April, when Trump first launched a sweeping set of import taxes.
Nor is there evidence that the tariffs are creating factory jobs or more construction of manufacturing facilities. Since April, the Bureau of Labor Statistics has reported that manufacturers cut 42,000 jobs and builders have downsized by 8,000.
“There’s no inflation,” Trump told reporters Thursday. “We’re having unbelievable success.”
Still, Trump also acknowledged that his tariffs against China had hurt American farmers, who lost out on sales of soybeans. The president separately promised on Thursday to divert tariff revenues to the farmers hurt by the conflict, just as he did during his first term in 2018 and 2019 when his tariffs led to retaliation against the agricultural sector.
AP
