U.S. to Impose 150% Tariffs on Pharmaceuticals, 700 Billion Dollar Semiconductor Market Next

In a significant move, the United States is poised to announce tariffs on semiconductor and pharmaceutical imports within the next week. This decision is part of a broader strategy to reshape global trade by targeting key economic sectors. The administration aims to initially impose lower tariffs on pharmaceuticals, which will gradually increase to 150% within a year and potentially reach 250% thereafter. This aggressive stance is intended to incentivize the production of pharmaceuticals within the country.

Additionally, the administration plans to implement measures against semiconductors and chips, another critical sector. The U.S. Department of Commerce has been investigating the semiconductor market since April, paving the way for potential tariffs on an industry with global sales nearing 700 billion dollars. Under the Trump administration, tariffs have already been imposed on imports of automobiles, steel, and aluminum.

The potential impact of these tariffs on major data center operators, such as Microsoft, OpenAI, Meta Platforms Inc., and Amazon, could be substantial. These companies are planning to invest heavily in advanced semiconductors to drive their artificial intelligence initiatives. The increased costs resulting from these tariffs could significantly affect their operations and strategic plans.

Advanced Micro Devices (AMD) reported quarterly earnings that fell short of expectations, with adjusted earnings per share at 48 cents, slightly below the anticipated 49 cents. However, the company's revenue of 76.9 billion dollars exceeded expectations of 74.2 billion dollars. For the current quarter, AMD forecasts sales between 84 billion dollars and 90 billion dollars, higher than the expected 83 billion dollars. The company's adjusted gross margin for the quarter was 43%, which could have reached 54% without export control costs.

Super Micro Computer, a server manufacturer, reported disappointing fourth-quarter results and provided a weak outlook for the upcoming quarter. The company's adjusted earnings per share were 41 cents, below the expected 44 cents, and revenue was 57.6 billion dollars, slightly below the anticipated 58.9 billion dollars. For the current quarter, Super Micro Computer expects adjusted earnings per share between 40 cents and 52 cents, with revenue between 60 billion dollars and 70 billion dollars. Analysts had predicted earnings per share of 59 cents and revenue of 66 billion dollars. For the fiscal year 2026, the company anticipates revenue of at least 330 billion dollars, surpassing the expected 299.4 billion dollars.

The U.S. President's persistent calls for significant interest rate cuts and potential changes to the Federal Reserve's leadership have brought increased scrutiny to the decision-making process of monetary policy and the individuals behind it. Unless there are more unexpected resignations, the current composition of the Federal Reserve suggests that the President may not achieve the substantial rate cuts he desires by 2026. The recent resignation of Federal Reserve Governor Adriana Kugler, who will step down on August 8, has opened a vacancy that the President plans to fill in the coming days. The nominee could become a leading candidate for the position of Federal Reserve Chairman when Jerome Powell's term expires in May 2026, potentially setting the tone for the administration's expectations regarding monetary policy.

However, even if the new Chairman aligns with the President's views on lowering borrowing costs, changing policy would require the support of a majority of the Federal Open Market Committee (FOMC) members. Former Federal Reserve officials and staff emphasize that policy debates must be based on economic conditions rather than political considerations.