A year after ‘Liberation Day’, Trump sets new drug tariffs, adjusts metals duties

WASHINGTON – US President Donald Trump ordered 100 per cent tariffs on certain branded pharmaceutical imports and overhauled steel, aluminium and copper duties on April 2 as his administration sought to move on from the collapse of the broad global tariffs he announced exactly one year ago.

The new tranche of tariffs is aimed partly at rebuilding duties lost when the Supreme Court struck them down in February. But they drew criticism from some business groups for adding potential new cost pressures at a time when the war on Iran has spiked energy prices for consumers.

In a new proclamation revealing the results of a long-awaited national security investigation into pharmaceutical imports, Mr Trump said foreign manufacturers of patented products must agree to make deals with the US government to cut prescription-drug prices and commit to moving production to the United States.

They must do both to avoid tariffs altogether and will face a 20 per cent tariff if they simply move some manufacturing to the US, according to an administration official. Those who do neither would face a 100 per cent tariff.

The tariffs will not apply to drug imports from all countries. Branded drug tariffs will be capped at 15 per cent under trade deals with the European Union, Japan, South Korea and Switzerland.

The US and Britain also finalised a separate pharmaceuticals tariff deal that guarantees zero tariffs on British-made pharmaceuticals for at least three years as Britain builds out production in the US.

An administration official said large pharmaceutical companies would have 120 days to comply before the 100 per cent tariff rate kicked in, and smaller producers would have 180 days.

Mr Trump also issued a separate metals tariff proclamation that halved the duty rate to 25 per cent on many derivative products made with steel, aluminium and copper, and dropped duties altogether on products with minimal metals content.

The move kept in place the 50 per cent duty on commodity imports of steel, aluminium and copper. But according to the official, the Trump administration will now apply this rate to the US sales price of the metals – not the declared import value, which the official said had often been kept artificially low.

The metals changes are aimed at simplifying an overly complicated tariff regime that gave importers headaches in trying to determine the value of the metal content of thousands of derivative products, from tractor parts to stainless steel sinks to railway equipment.

Products with minimal metal content of less than 15 per cent by weight, such as a dental floss container with a tiny steel cutter blade, will no longer be subject to these tariffs.

The White House also said it will cut duties on certain metal-intensive industrial and power-grid equipment to 15 per cent from 50 per cent till end-2027 to aid a broad industrial and data-centre build-out.

The change in the metals tariffs would be effective just after midnight on April 6, the order said.

The changes came on the one-year anniversary of Mr Trump’s “Liberation Day” announcements of “reciprocal tariffs” ranging from 10 per cent to 50 per cent on imports from all trading partners and even some uninhabited islands.

The tariffs under the International Emergency Economic Powers Act (IEEPA) kicked off months of retaliation from China, trade negotiations with other countries and court challenges from importers.

The US Supreme Court in February declared the IEEPA-based tariffs illegal, prompting a Lower Court order for the US Customs and Border Protection agency to devise a plan to refund some US$166 billion (S$213 billion) in tariffs collected over a year.

Mr Jamieson Greer, the US Trade Representative, on April 2 defended the IEEPA tariffs as a “reset button” for a broken global trading system and credited the tariffs with driving companies to build new factories in the US and forcing trading partners to grant concessions for US exports.

“The best is yet to come as President Trump’s tariff programme incentivises domestic production, raises workers’ wages and reinforces our critical supply chains,” Mr Greer said in a statement.

The US Chamber of Commerce said that a full year of Mr Trump’s higher tariffs has already raised prices and added cost pressures for many industries, and warned that the latest announcements could spur further price increases.

“A new, complex tariff scheme on pharmaceuticals will raise healthcare costs for American families,” the chamber’s policy chief Neil Bradley said in a statement.

“Changes to metals tariffs will likewise raise prices for consumers and add pressure to manufacturing, construction and energy – industries that are already reeling from higher input costs and ongoing supply-chain challenges.”

But Steel Manufacturers Association president Philip Bell praised the administration for “right-sizing” the metals derivatives list and updating its valuation methodology to ensure that tariffs “remain precisely targeted to support the revitalisation of the American steel industry without undermining broader economic goals”. REUTERS