After Steel and Aluminum, It's Autos and Semiconductors' Turn to Be Hit by Trump's Tariffs

MAR-A-LAGO, WEDNESDAY – The President of the United States, Donald Trump, announced the imposition of new tariffs on automotive products, pharmaceuticals, and semiconductors. The plan is for a 25 percent tariff on each of these commodities to take effect starting April 2, 2025.

"On April 2, it will be announced again. I want to give these companies space to prepare to move production to the US," said Trump, Tuesday (18/2/2025) local time in Mar-A-Lago, Florida or Wednesday (19/2/2025) Indonesia time.

According to Trump, these companies have a choice: either invest in the US or pay a high price. If they invest by opening factories or relocating production that has been overseas to the US, their products will not be subjected to tariffs.

The announcement of the latest tariffs follows the announcement in early February 2025, which imposed a 25 percent tariff on steel and aluminum products from countries including Canada and Mexico. However, the three North American countries are bound by a free trade agreement.

"Initially, the tariff will be 25 percent, but it will gradually increase every year," Trump continued.

The automotive market has long been targeted by Trump. The reason is that American cars exported to other countries are subject to high import duties. The European Union, for example, imposes a 10 percent import tariff on American cars. Conversely, European cars entering the United States are only subject to a 2.5 percent tariff.

As reported by Bloomberg, the US imported 8 million units of cars in 2024. This amount is equivalent to half of the car sales in the country. These vehicles include passenger cars as well as freight trucks. If new tariffs are imposed, the Volkswagen brand from Germany and Hyundai from South Korea are certain to be affected.

Trump wants the EU to lower their import tariffs to be on par with the US. So far, the EU has always rejected this idea. Trump also wants the EU to import more US-made vehicles. The US Census Bureau calculated that in 2024, the US trade balance with the EU had a deficit of 235.6 billion US dollars.

European Union Commissioner for Trade and Economic Security Maros Sefcovic is scheduled to fly to Washington DC on Thursday (20/2/2025). There, he plans to meet with US Secretary of Commerce Howard Lutnick, Director of the National Economic Council Kevin Hassett, and the prospective Head of the Office of the United States Trade Representative (USTR) Jamieson Greer.

In the semiconductor sector, there has been no response from the Netherlands and Taiwan as the two largest semiconductor manufacturers in the world. Apart from them, other countries that are definitely affected are Singapore, Malaysia, Japan, and South Korea. In fact, Trump's tariff announcement came just days before Singapore Prime Minister Lawrence Wong announced that the government would invest 1 billion Singapore dollars in semiconductor research and development as part of a national strategic plan.

Technology media, Tom’s Hardware reported, Trump wants to reduce dependence on Taiwan Semiconductor Manufacturing Company (TSMC). As much as 50 percent of the world’s chips and semiconductors are made by TSMC. US companies, including Qualcomm, Apple, and Nvidia, produce their processors in Taiwan.

If TSMC invests and opens a factory in the US, it will take about three to five years to start production. That means the factory will only be there around 2028-2029. Meanwhile, electronic products, including smartphones and computers, will become more expensive for Americans.

Wisconsin Governor Tony Evers is the first state leader in the US to publicly criticize Trump. Wisconsin is a center of agriculture and forestry in the US. Their products are widely exported to other countries, including China. Trump has imposed an additional 10 percent tariff on China. As a result, all imported commodities from China are now subject to a total tariff of 60 percent.

"This trade war is raising the prices of all these things, which is hurting people. At the same time, our export capacity is also going to be hurt by the disruption," Evers said.

Canadian Prime Minister Justin Trudeau said in an interview with CNN on January 10, 2025, that if the US imposes tariffs on Canadian products, the US people will pay the additional costs. Trump suspended the imposition of 25 percent tariffs on imports from Canada and Mexico, but kept the 25 percent tariffs on steel and aluminum from the two countries.

Trudeau said there was a time when Canada was forced to impose retaliatory tariffs on products they imported from the U.S. Some 35 of the 50 U.S. states export commodities to Canada. These include whiskey, bourbon and fruit.

“These are products that Canada can get from other countries at a much more affordable price,” Trudeau said. (Reuters/AP)