Trump Announces New 100% Tariffs on Pharmaceuticals

U.S. President Donald Trump announced that starting October 1, the U.S. will impose 100% tariffs on imports of branded pharmaceuticals, 25% tariffs on heavy trucks, 50% tariffs on kitchen cabinets, and 30% tariffs on upholstered furniture.

He stated that the new tariffs on heavy trucks aim to protect manufacturers from ‘unfair foreign competition’ and that this move will benefit companies like Peterbilt, Kenworth, and Freightliner, owned by Daimler.

In the context of threats to U.S. manufacturing, Trump also expressed concerns for national security.

– We need financially healthy and strong truck manufacturers for many reasons, but primarily for national security! – Trump said.

The U.S. Chamber of Commerce has appealed against the introduction of new tariffs on trucks, noting that five importing countries – Mexico, Canada, Japan, Germany, and Finland – are allies or close partners of the U.S. and do not pose a threat to national security.

Mexico is the largest exporter of medium and heavy trucks to the U.S., and the tariffs could also affect Chrysler’s parent company, Stellantis, which produces Ram trucks and commercial vans in Mexico.

There is also the example of the Swedish Volvo Group, which is building a $700 million heavy truck factory in Monterrey, Mexico, expected to start operations in 2026.

Mexico is also the leading global exporter of tractors, 95% of which are destined for the U.S. market, according to Reuters.

Regarding pharmaceuticals, Trump stated that the new 100% tariff on any branded or patented pharmaceutical product will apply to all imports unless the company has already begun construction of a manufacturing facility in the U.S.

Earlier, the American pharmaceutical manufacturers’ association opposed the tariffs, stating that 53% of the $85.6 billion worth of ingredients used in drugs consumed in the U.S. are produced in the country, with the remainder coming from Europe and other U.S. allies.

When it comes to new tariffs on kitchen, bathroom, and some other furniture, Trump stated that they are caused by enormous levels of imports that harm local manufacturers.

New Tariffs Cause Decline in Asian Markets

The new tariffs have caused a decline in Asian markets while Wall Street has been down for the third consecutive day. The MSCI Asia-Pacific index was down more than one percent at 7:00 AM.

Stock prices in Shanghai, India, Japan, Hong Kong, and South Korea fell between 0.2 and 2.8 percent. In Australia, however, they slightly increased.

Investors are cautious due to yesterday’s further decline of Wall Street, marking the third day in a row. The Dow Jones fell by 0.38 percent, while the S&P 500 and Nasdaq indices slid by 0.50 percent.

Yesterday, a second estimate was released showing that the U.S. economy grew by 3.8 percent year-on-year in the second quarter, faster than the first estimate indicated.

Additionally, the number of unemployment claims fell by 14,000 last week to 218,000, lower than analysts had expected.

Strong economic growth and a relatively stable labor market lead to the conclusion that the U.S. central bank should not rush into further interest rate cuts.

Moreover, the president of the Chicago Fed branch, Austan Goolsbee, stated yesterday that he is not inclined to a rapid reduction in rates, given the risks of inflation.

The Fed reduced interest rates by 0.25 percentage points last week due to weakness in the labor market, and investors hoped that the central bank would continue to lower the cost of money until the end of the year.

However, the latest economic data calls this into question, and the hope for sharp rate cuts has been a major market driver for some time.

– The latest economic data is somewhat confusing and raises the question of how much the Fed should cut rates, and even whether it should cut them further this year – says Peter Tuz, president of Chase Investment Counsel.

New inflation data in the U.S. will be released on Friday. An increase is expected, given that Trump has imposed tariffs on imports from numerous countries around the world. An increase in inflation would mean that the Fed has less room to cut interest rates.

On the currency markets, the value of the dollar against a basket of currencies has significantly increased for the second consecutive day. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 98.47 points this morning, close to the highest level in three weeks, while it was 97.80 points at the same time yesterday. Meanwhile, the price of the euro slipped from yesterday’s 1.1745 to 1.1680 dollars.

The U.S. currency has also strengthened against the Japanese yen, with the dollar exchange rate reaching 149.70 yen, compared to 148.60 yen at the same time yesterday. Oil prices, on the other hand, have risen. In the London market, the price of a barrel increased by 0.17 percent to $69.55, while in the U.S. market, a barrel rose by 0.32 percent to $65.20.