Trump's Subtle Tariff Strategy: A New Approach to Trade Policy

President Trump's tariff strategy involves two sets of tariffs, authorized by the International Emergency Economic Powers Act (IEEPA) and Section 232 of a 1962 trade law. The IEEPA tariffs are announced in country-by-country letters, while Section 232 tariffs are imposed on various products, such as pharmaceuticals. Trump has used Section 232 extensively, with nine investigations ongoing, and has imposed tariffs on a range of products, including steel, aluminum, and washing machines. Critics argue that Trump's tariffs are not focused on national security, as required by law.

President Donald Trump has announced potential tariffs on imported pharmaceuticals and semiconductors, signaling an escalation in his broader “reciprocal tariff” strategy. The tariffs, authorized by the International Emergency Economic Powers Act (IEEPA) and Section 232 of the Trade Expansion Act of 1962, aim to bolster domestic production and address national security concerns [1].

Trump has threatened a 200% tariff on pharmaceuticals after a one-year grace period, with a low initial tariff to allow companies to shift production back to the US. Semiconductor tariffs are also on a similar timeline, with Trump suggesting they will be “less complicated” to enforce [1]. These actions come as part of Trump's ongoing trade policy, which he has described as the “most beautiful word in the dictionary” [2].

If enacted, the pharmaceutical tariffs could significantly impact major drugmakers like Eli Lilly, Merck, and Pfizer, who rely heavily on overseas production. Meanwhile, chip tariffs are expected to affect tech giants like Apple and Samsung, potentially driving up prices for consumer electronics [1].

Trump's tariff strategy has been criticized for not focusing on national security, as required by law. However, he maintains that the volume of drug imports poses a threat to the US. His administration has also threatened tariffs on a range of other products, including steel, aluminum, and washing machines, under Section 232 [1].

The threat of these tariffs comes as Trump has issued tariff letters to several trading partners, outlining import duties unilaterally. However, he insists that negotiations are still on the table. Earlier this week, Trump announced a revised deal with Indonesia, cutting its proposed tariff rate from 32% to 19% in exchange for multibillion-dollar US purchases, including 50 Boeing aircraft [1].

References:
[1] https://timesofindia.indiatimes.com/business/international-business/us-pharma-threats-donald-trump-warns-of-drug-tariffs-by-month-end-semiconductor-leviesmayfollow/articleshow/122548866.cms
[2] https://www.tradecomplianceresourcehub.com/2025/07/14/trump-2-0-tariff-tracker/