Donald Trump on Thursday announced a new round of punishing tariffs, saying the United States will impose a 100% tariffs on imported branded drugs, 25% tariff on imports of all heavy-duty trucks and 50% tariffs on kitchen cabinets.
The US president also said he would start charging a 50% tariff on bathroom vanities and a 30% tariff on upholstered furniture next week, with all the new duties to take effect from 1 October.
Drug companies warned earlier this year that Americans would suffer the most if Trump decided to impose tariffs on pharmaceuticals.
In 2024, the US imported nearly $233bn in pharmaceutical and medicinal products, according to the Census Bureau. The prospect of prices doubling for some medicines could send shock waves to voters as healthcare expenses, as well as the costs of Medicare and Medicaid, potentially increase.
Pascal Chan, vice-president for strategic policy and supply chains at the Canadian Chamber of Commerce, warned that the tariffs could harm Americans’ health with “immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or foregoing essential medicines”.
“We are already being crushed by the highest prescription drug costs in the world and this will cause them to skyrocket further,” 314 Action, a US advocacy group that tries to elect scientists to office, said in a statement. “If [Trump] goes through with these tariffs, people across the country will die.”
Trump had previously suggested that pharmaceutical tariffs would be phased in over time so that companies had time to build factories and relocate production, making the sudden announcement of a 100% tariff more of a shock. On CNBC in August, Trump said he would start by charging a “small tariff” on pharmaceuticals and raise the rate over a year or more to 150% and even 250%.
Trump said on Truth Social that the pharmaceutical tariffs would not apply to companies that are building manufacturing plants in the United States, which he defined as either “breaking ground” or being “under construction”. It was unclear how the tariffs would apply to companies that already have factories in the US.
Several major pharmaceutical companies, including AstraZeneca, Roche, Novartis, Eli Lilly, and Johnson & Johnson, had already announced plans to invest in or increase manufacturing of their drugs in the US in an attempt to prepare for potential tariffs. Trump’s White House has touted these changes as a win.
Markets dropped following the news, as concerns about the impact of Trump’s tariffs mounted. All three main indexes on Wall Street were down, having already fallen every day since Monday.
Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei and Manila retreated on Friday, with some pharmaceutical companies in Japan and South Korea leading the way.
While Trump did not provide a legal justification for the tariffs, he appeared to stretch the bounds of his role as commander-in-chief by stating on Truth Social that the taxes on imported kitchen cabinets and sofas were needed “for National Security and other reasons”.
He said the new heavy-duty truck tariffs were to protect manufacturers from “unfair outside competition” and said the move would benefit companies such as Paccar-owned Peterbilt and Kenworth and Daimler Truck-owned Freightliner.
“We need our Truckers to be financially healthy and strong, for many reasons, but above all else, for National Security purposes!” Trump added.
The new tariffs are another dose of uncertainty for the US economy with a solid stock market but a weakening outlook for jobs and elevated inflation. These new taxes on imports could pass through to consumers in the form of higher prices and dampen hiring, a process that economic data suggests is already underway.
“We have begun to see goods prices showing through into higher inflation,” Federal Reserve chair, Jerome Powell, warned in a recent news conference, adding that higher costs for goods account for “most” or potentially “all” of the increase in inflation levels this year.
Trump has pressured Powell to resign, arguing that the Fed should cut its benchmark interest rates more aggressively because inflation is no longer a concern.
The US Chamber of Commerce urged the department not to impose new tariffs, noting the top five import sources are Mexico, Canada, Japan, Germany, and Finland “all of which are allies or close partners of the United States posing no threat to U.S. national security”.
Trump has launched numerous national security inquiries into potential new tariffs on a wide variety of products. He said the new tariffs on kitchen, bathroom and some furniture were because of huge levels of imports which were hurting local manufacturers.
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“The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside Countries,” Trump said.
Mexico is the largest exporter of medium- and heavy-duty trucks to the United States. A study released in January said imports of those larger vehicles from Mexico have tripled since 2019.
Higher tariffs on commercial vehicles could put pressure on transportation costs just as Trump has vowed to reduce inflation, especially on consumer goods such as groceries.
Tariffs could also affect Chrysler-parent Stellantis which produces heavy-duty Ram trucks and commercial vans in Mexico. Sweden’s Volvo Group is building a $700m heavy-truck factory in Monterrey, Mexico, due to start operations in 2026.
Mexico is home to 14 manufacturers and assemblers of buses, trucks, and tractor trucks, and two manufacturers of engines, according to the US International Trade Administration.
The country is also the leading global exporter of tractor trucks, 95% of which are destined for the United States.
Mexico opposed new tariffs, telling the commerce department in May that all Mexican trucks exported to the United States have on average 50% US content, including diesel engines.
Last year, the United States imported almost $128bn in heavy vehicle parts from Mexico, accounting for approximately 28% of total US imports, Mexico said.
The Japanese Automobile Manufacturers Association also opposed new tariffs, saying Japanese companies have cut exports to the United States as they have boosted US production of medium- and heavy-duty trucks.
Reuters and the Associated Press contributed reporting