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Pharma, chips, other sectors look set to get hit with new tariffs soon, even as courts wrestle with other Trump levies
@Source: marketwatch.com
The main U.S. stock gauges SPX+0.40% DJIA+0.28% COMP+0.39% opened higher Thursday, boosted by enthusiasm over the trade court’s ruling and ended with modest gains. During the trading session, a federal appeals court allowed Trump’s country-focused tariffs to stay in effect for now. If those levies end up going away, the average effective U.S. tariff rate will be around 7%, down from about 18%, according to estimates from the Budget Lab at Yale.Trump’s existing sector-based tariffs — his 25% duty on imported steel and aluminum and his 25% levy on imported automobiles and many auto parts — are unaffected by this week’s court rulings, as they were issued under a different rule related to national security, Section 232 of the Trade Expansion Act of 1962.A number of other sectors are also expected to get hit with Section 232 tariffs, and the required investigations for such levies have been under way for weeks or months. Additional sectors look set to face new tariffs as well as a result of ongoing investigations based on a rule related to unfair trade practices — Section 301 of the Trade Act of 1974.
The ING strategists said the sectors that could face new tariffs due to these investigations include pharmaceuticals PJP+1.30%, semiconductors SMH+0.71%, shipbuilding, medium- and heavy-duty trucks, critical minerals, seafood, cranes, copper HG00-0.07%, lumber and aircraft. They have put together a chart, below. Apple Inc. AAPL-0.23%, Samsung Electronics Co. 005930+0.36% and other makers of smartphones appear likely to get caught up in the much-anticipated Section 232 tariffs for semiconductors. Trump last week warned these companies that they could face import taxes of at least 25%, and analysts viewed his remarks as being related to his administration’s efforts around imposing tariffs on semiconductors. The Trump administration in April exempted smartphones and other electronics from some recently announced tariffs, but officials at that time stressed that those products soon would be subject to their own chip-focused duties.Below is a table giving the current state of the Trump administration’s taxes on U.S. imports:Trump’s tariffsTargetStatus of tariffs Apple, Samsung and their competitorsApple, Samsung and any maker of smartphones that aren’t manufactured in the U.S. could face a 25% tariff at the end of June, Trump said last week. This tariff threat appears to be tied to his administration’s efforts to impose Section 232 tariffs on semiconductors and related electronic products.Other key industries or sectorsSection 232 tariffs of 25% are in effect for steel and aluminum imports, as well as for imported cars and certain auto parts. Import taxes based on Section 232 or Section 301 appear likely for other sectors, including pharmaceuticals and copper, but they haven’t been imposed so far.ChinaA court ruling on Wednesday blocked Trump’s tariffs on China, but then an appeals court on Thursday said they can remain in place. Trump’s tariff rate for China has dropped for 90 days to 30%, from 145% previously, as trade talks continued. There also have been exemptions for electronics.Canada and MexicoA court ruling on Wednesday blocked Trump’s tariffs on Canada and Mexico, but then an appeals court on Thursday said they can remain in place. A 25% tariff is in effect, with exemptions for USMCA-compliant goods (an estimated 38% of Canadian imports and 50% of Mexican imports). There also is a lower duty of 10% on potash, a substance typically used for fertilizer, and on Canadian energy products.E.U., many other U.S. trading partnersA court ruling on Wednesday also blocked Trump’s tariffs on other U.S. trading partners besides China, Canada and Mexico, but then an appeals court on Thursday said they can remain in place. Other trading partners are facing a 10% tariff following a 90-day pause on Trump’s “liberation day” tariffs, which were announced on April 2. This pause is due to end around July 8. For the E.U., Trump last week said a 50% levy could hit June 1, but he relented on Sunday, giving the trade bloc until July 9.U.K.The Trump administration has been talking up the potential for trade deals with other countries, and it actually made a deal with the U.K. With that deal, the U.S. kept a 10% tariff in place on most U.K. imports, but there were reprieves for British cars, steel and aluminum. The 10% levy for U.K. products appeared to be on hold following Wednesday’s court ruling, but then an appeals court on Thursday said it can remain in place.
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