Trump Warns 25% Tariffs On Cars, Drugs And Chips Coming In April

With Wall Street growing more confident by the day that Trump’s tariffs are nothing but hot air, and pushing stocks to new record highs, today after the close President Donald Trump tried to reassure the market that tariffs are indeed coming and said he would likely impose tariffs on auto, semiconductor and pharmaceutical imports of around 25%, with an announcement coming as soon as April 2.

The new duties, if implemented, would widen the president’s trade war. Trump previously announced 25% tariffs on steel and aluminum that are set to take effect in March, but Tuesday’s comments are his most detailed yet in specifying other sectors that would be hit with fresh barriers.

“I probably will tell you that on April 2, but it’ll be in the neighborhood of 25%,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs.

Asked about similar levies on pharmaceutical drugs and semiconductor chips, the president said: “It’ll be 25% and higher, and it’ll go very substantially higher over a course of a year.” Trump added that he wanted to give companies “time to come in” before announcing new import taxes.

“When they come into the United States and they have their plant or factory here there is no tariff, so we want to give them a little bit of a chance,” he said.

As noted last week, Trump also threatened other streams of tariffs, all part of an effort to rebalance the US’s trading relationships across the globe. The president has long accused other countries of ripping off the US and views import duties as a way to bring industries back to America and collect more revenue. Many economists say they would raise consumer prices for Americans and stymie the fight against inflation.

The president has said he would apply “reciprocal” levies on a country-by-country basis as soon as April, though specifics are still being determined. He has also threatened duties on some of the US’s biggest trading partners, such as a 10% rate already applied to China and 25% tariffs on Canada and Mexico that have been deferred until at least March 4. The measures would stack on top of one another, meaning that Mexican and Canadian producers in certain sectors could pay as many as three tariffs.

Altogether, Trump’s moves, if enacted, would remake supply chains and trade flows — and US prices. Tariffs are paid by importers and often passed onto consumers, though sometimes offset by price reductions abroad.

The direction of President Trump’s tariff strategy became clearer over the past week, shifting away from the broad, universal levies that some Wall Street analysts had anticipated. Rather than imposing universal tariffs, the administration issued an executive order last Thursday establishing a reciprocal tariff policy for all current and potential US trading partners. By the weekend, Trump doubled down on reciprocal tariffs, stating that the move would ensure “a level playing field for American workers.” 

On Monday, Goldman’s Jan Hatzius, Alec Phillips, David Mericle, Ronnie Walker, and others penned a note for clients titled “Earnings Season Takeaways: Animal Spirits Over Tariffs.” 

In the note, the analysts provided a visual for clients showing that the percentage of management teams in corporate America discussing ‘tariffs’ this earnings season has surpassed 40%, far exceeding the previous peak (of around 30%) during Trump’s first term, when he initiated the trade war with China.

More color from the analysts:

Management references to tariffs soared amid the start of a second trade war (Exhibit 3). After signing orders imposing new tariffs on Canada, Mexico, and China, President Trump delayed the Canada and Mexico tariffs until March 4. We think a further extension is likely, but the tariff risk for both countries is likely to remain until at least the conclusion of the USMCA review slated for mid-2026. In addition to the China tariffs that have already been implemented, we expect tariffs on imports from China to rise further, for the announced steel and aluminum tariffs to be implemented, and for new tariffs on EU autos and critical imports (i.e. oil, pharmaceuticals, semiconductors, and other electrical equipment) to ultimately be implemented.

Latest commentary from management teams about the ongoing tariff situation:

On tariff impacts, the analysts noted: “Analyst expectations for capex—a proxy for company guidance—similarly suggest that the escalation in tariff policy will weigh on the investment decisions of the exposed companies.” 

They added, “Similar to last quarter, companies suggested that they could mitigate the impact of tariffs by passing along the higher cost to customers and stockpiling goods before their implementation.”

After last week’s CPI and PPI—both of which printed hotter than expected—coupled with the tariff war, fears have emerged of a redux of the mid-1970s …

Last week, readers were given a roadmap for the next iteration of Trump’s trade war—reciprocal tariffs—(read: here).