Reviving “America First”: Trump Era Trade Policies Resurface

The United States is once again evaluating the imposition of tariffs on imported semiconductors and pharmaceutical products, signaling a potential resurgence of trade policies reminiscent of the Trump President Trump administration. These investigations, initiated by the Department of Commerce, could significantly reshape global supply chains and impact various sectors of the American economy.

National Security Justification: Protecting Critical Industries

Citing Section 232 of the 1962 Trade expansion Act, the Commerce department is investigating whether imports of computer chips and pharmaceuticals pose a threat to protect national security. This law allows the President to impose tariffs if imports are deemed detrimental to national security. The investigation into semiconductors will assess the capacity of domestic chip production to satisfy US demand, scrutinizing manufacturing, assembly, testing, and packaging processes.

A key concern is the risks that production is concentrated abroad. The government aims to understand how foreign government subsidies impact the industry and affect the competitiveness of American companies. This focus aligns wiht a broader effort to bolster domestic manufacturing and reduce reliance on foreign suppliers for critical goods.

Semiconductors: A Vulnerable Supply Chain

the US is heavily reliant on imports from Taiwan and South Korea for advanced chips. Taiwan, in particular, dominates the production of advanced logic chips, holding 92% of global manufacturing capacity, while South Korea accounts for the remaining 8%, according to the International trade Administration. This concentration of production raises concerns about potential disruptions and vulnerabilities in the supply chain.

The investigation will delve into the semiconductor supply chain,examining the potential risks associated with concentrated foreign production. The impact of foreign government subsidies on the industry and their affect on US competitiveness will also be scrutinized.

Pharmaceuticals: Addressing Foreign Dependence

The inquiry into pharmaceutical imports will focus on the active pharmaceutical ingredients (APIs) used in medications and re-evaluate national security concerns related to foreign dependence. Currently, over 70% of APIs used in US-made drugs are sourced from other countries, with India, the European Union and China the main suppliers. While the US produces approximately one-fifth of the world’s pharmaceutical products, it consumes about 45%, far exceeding any other nation.

As Secretary of Trade, Howard lutnick, stated in an interview with ‘ABC News’, the goal is to ensure that essential medications are manufactured domestically, emphasizing, We need to manufacture semiconductors and We have to manufacture medications in this country.

potential Impact and Industry Response

While the administration’s plans suggest that electronic products like portable computers and smartphones will continue to be subject to existing tariffs, there is the potential for specific additional levies by sectors.These products accounted for nearly $174 billion in American imports from China last year.

However, shifting supply chains is a complex and costly undertaking. As noted by major computer chips manufacturers, such as semiconductor manufacturing corp., the expensive process of changing supply chains would take years to complete.

Tomatoes: A Shift in Trade Agreements

In a related growth, the Department of Commerce announced its withdrawal from a 2019 agreement that had suspended an anti-dumping investigation into imports of fresh tomatoes from Mexico, effective in 90 days.The department stated that the current agreement failed to protect American producers from unfairly priced tomato imports. Consequently, most tomatoes from mexico will now be subject to a tariff of 20.91%.