Quick Read
- The US Commerce Department has initiated probes into imports of computer chips, chip-making equipment, and pharmaceuticals.
- The investigations aim to evaluate national security risks and the potential for reshoring production.
- The move follows President Trump’s push for tariffs on key imports to strengthen domestic manufacturing.
- Taiwan and South Korea dominate advanced chip production, while the US heavily relies on foreign pharmaceutical ingredients.
- Public comments on the investigations are being accepted for three weeks.
US Launches Investigations Into Key Imports
The United States has taken a significant step toward imposing additional tariffs on critical imports, including computer chips, chip-making equipment, and pharmaceuticals. The Department of Commerce announced these investigations on the Federal Register, seeking public input over the next three weeks. The move aligns with President Donald Trump’s broader strategy to bolster domestic production and safeguard national security.
Focus on National Security and Domestic Production
Under Section 232 of the Trade Expansion Act of 1962, the president has the authority to impose tariffs for national security purposes. The current investigations aim to assess how imports of computer chips and related equipment, as well as pharmaceuticals, impact the United States’ self-reliance and security. This includes evaluating the domestic capacity to meet demand and the risks posed by foreign manufacturing and supply chain dependencies.
Computer Chip Supply Chain Under Scrutiny
The investigation into computer chips extends to the entire supply chain, including manufacturing, assembly, testing, and packaging. The United States remains a major producer of semiconductors but relies heavily on imports for advanced chips. According to the International Trade Administration, Taiwan dominates advanced logic chip production, accounting for 92% of global capacity, with South Korea contributing 8%.
Products containing computer chips, such as smartphones, cars, and household appliances, are integral to daily life. The government aims to address the risks of concentrated production in foreign nations and the impact of foreign subsidies and trade practices on U.S. competitiveness. Despite investments by companies like Taiwan Semiconductor Manufacturing Corp. in U.S. facilities, reshoring the supply chain is a costly and time-consuming process.
Pharmaceutical Imports and Domestic Manufacturing
The pharmaceutical sector is another focal point of the investigations. Over 70% of active pharmaceutical ingredients (APIs) used in U.S.-made medicines are sourced from abroad, with India, the European Union, and China being the primary suppliers. While the U.S. produces about 20% of the world’s pharmaceuticals, it consumes 45%, highlighting a significant reliance on imports.
President Trump has emphasized the importance of reshoring pharmaceutical production to ensure national security and reduce dependency on foreign suppliers. Speaking on Monday, he stated, “We’re doing it because we want to make our own drugs.”
Sector-Specific Tariffs and Policy Implications
U.S. Commerce Secretary Howard Lutnick has clarified that the administration plans to implement “sector-specific” tariffs on pharmaceuticals, semiconductors, and automobiles. These tariffs are non-negotiable and aim to prioritize the production of core national security items within the country. Lutnick stated, “We need to make medicine in this country. We need to make semiconductors.”
Electronics, which account for a significant portion of U.S. imports from China, are expected to remain subject to existing tariffs. In 2022, imports of laptops, smartphones, and related components from China totaled nearly $174 billion.
Additional Tariff Measures
In a separate announcement, the Commerce Department revealed its decision to withdraw from a 2019 agreement that had suspended an antidumping investigation into fresh tomato imports from Mexico. Effective in 90 days, the withdrawal will subject most Mexican tomatoes to a 20.91% tariff. The department stated that the current arrangement failed to protect U.S. growers from unfairly priced imports.
Public Feedback and Next Steps
The Commerce Department is inviting public comments on the ongoing investigations, with a three-week window for submissions. These comments will play a crucial role in shaping the administration’s final decisions on tariffs and trade policies.
The investigations mark a critical juncture in the U.S. government’s efforts to address vulnerabilities in key industries and reduce reliance on foreign imports. While the proposed measures aim to strengthen domestic manufacturing, they also raise questions about potential economic impacts and the feasibility of reshoring complex supply chains.