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An aerial photo shows the Kumamoto factory of Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the largest semiconductor contract manufacturer, in Kikuyo Town, Kumamoto Prefecture, Japan, on March 14, 2025.
Trump prepares to slap tariffs on semiconductors and pharma
The topsy-turvy-tariff tale continued to swing this week, as the Trump administration advanced a plan on Monday that could result in new levies on semiconductors and pharmaceuticals. The news came days after US President Donald Trump announced that smartphones would be exempt from the 145% duty that he had slapped on China.
Officially, the plan involves a first step of investigating the national security implications of importing pharma and semiconductors. The next step would be to invoke Section 232 of the 1962 Trade Expansion Act, which allows a president to impose tariffs in the interests of protecting national security. As such, the means for this latest slate of levies would be different from the widescale duties announced on “liberation day.”
Countries affected. The United States relies heavily on Taiwan in particular for semiconductors — one plant there crafts 92% of the world’s advanced chips. As for pharmaceuticals, the US imports many from China, Ireland, and India.
All that and a bag of CHIPS. Former President Joe Biden tried to spark the US’s own semiconductor industry with the 2022 CHIPS and Science Act, which allocated $53 billion for domestic semiconductor manufacturing. Trump said last month he wanted to “get rid of” the CHIPS Act, yet his more recent actions suggest he’s interested in leveraging the law to further his plan to reduce US reliance on foreign chips.President Joe Biden waits on stage during a White House event announcing moves to lower the prices of ten widely-used prescription drugs
Biden’s drug deal of the century
The Biden administration this week selected the first 10 drugs that will be subject to price negotiations between the US government and pharma companies.
The move, part of the White House’s signature Inflation Reduction Act, aims to bring down the sky-high prices that people on Medicare, the government’s medical insurance program for people 65 and older, pay for many lifesaving drugs. By wrangling down drug prices, Biden also hopes to shore up the financial solvency of Medicare itself. The new, lower drug prices are supposed to take effect by 2026.
Bringing down drug prices is hugely popular with Americans of both parties, particularly older folks. Americans, on average, pay more than twice as much for medicines as people in other advanced economies, and more than three times as much for brand-name drugs, according to a 2021 Rand Corporation study. Nearly 30% of Americans have trouble paying for their meds, a recent Kaiser Family Foundation study found.
But Big Pharma isn’t happy about it. Drug manufacturers say that artificially suppressing prices for cutting-edge medications will rob them of the money they need to invest in developing new cures. Several large companies have already sued the Biden administration, arguing that the move violates constitutional prohibitions on the government messing with people’s private property.
Don’t be surprised if this one goes all the way to the Supreme Court.