Estimated read time: 4-5 minutes
- President Trump announced 25% tariffs on imported vehicles, pharmaceuticals, and microchips.
- Economists warn these tariffs could increase U.S. car prices significantly and impact various industries.
- Utah's trade, especially with Canada, China, and Mexico, may be affected by these tariffs.
WASHINGTON — During a Tuesday press conference at his Mar-a-Lago resort, President Donald Trump said new sector-specific U.S. trade tariffs were in the works, including 25% levies on imported vehicles, pharmaceutical products and computer microchips.
When asked if he'd decided on the new tariff rate for imported vehicles, Trump said he would share a final decision on April 2 but that it "will be in the neighborhood of 25%."
Trump also said new tariffs on pharmaceutical products and microchips will be "25% and higher and it'll go very substantially higher over the course of a year." The president also indicated he will give importers that have U.S.-based manufacturing capacity to move production to domestic facilities where output would not be beholden to the new tariff assessments.
Will car prices go up?
Last year, about half of the 16 million light-duty vehicles sold in the U.S. were imported, according to a Wall Street Journal report. Of those imports, about half came from plants in Canada and Mexico and the other half from factories outside North America. Automobiles imported to the U.S. from Canada and Mexico are currently protected from tariff levies under the U.S.-Mexico-Canada Agreement that Trump signed in 2020.
The steep new tariffs could have impacts far beyond the targeted industries, economists and industry experts have warned, and U.S. consumers could see new car prices jump by thousands of dollars, according to a CNN report.
Tariffs on pharmaceuticals and microchips
The U.S. purchased more than $176 billion of drugs and related goods in 2023, according to U.S. trade data, making it the largest importer of pharmaceutical products that year, per CNN.
European, Indian and Chinese firms could be the hardest hit. In 2023, Ireland accounted for 20.4% of pharmaceutical imports, followed by 10.8% from Germany, 8.6% from Switzerland, 6.2% from India and 3.4% from China.
In 2023, U.S. companies imported over $25 billion in semiconductor products, which include microchips.
Last week, Trump announced an effort to conduct a country-by-country review of the tariffs other nations impose on the U.S. with an expected completion date of April 1. At Tuesday's press event, the president said, "essentially what we're doing with the tariffs is ... whatever they charge us, we charge them."
Here's what's happening with other new U.S. tariffs
Trump has so far issued tariffs targeting select goods from Canada, China and Mexico as well as an import-specific assessment on steel and aluminum. Earlier this month, Trump announced plans to impose 25% tariffs on goods from Mexico and Canada and 10% tariffs on goods imported from China. The plan also included a 10% tariff on energy resources from Canada.
But both Mexico and Canada earned 30-day delays on tariff implementations, which were due to kick in earlier this month, after pledging to take actions aimed at reducing the flow of fentanyl across their borders into the United States.
The China tariffs went into effect as scheduled and the Asian economic powerhouse immediately hit back with its own new trade taxes on U.S. imports, targeting coal and liquified natural gas with a new 15% levy as well as 10% on U.S.-sourced crude oil, farm equipment and some automobile imports.
Last week, Trump substantially raised tariffs on steel and aluminum imports to a flat 25% "without exceptions or exemptions" in a move he hopes will aid the struggling industries in the United States but which also risks sparking a multi-front trade war, and changing the course of the U.S. economy, per a report from Reuters. The measures are due to take effect on March 4.
Utah's international trade footprint
According to a report published last year by the University of Utah's Kem C. Gardner Policy Institute, Utah companies produced $17.4 billion worth of international goods exports in 2023 that generated over $4 billion in earnings and directly supported nearly 72,000 jobs. That volume contributed over $8 billion to the state's gross domestic product and $16.7 billion to the state's gross output. The state exported goods to 200 countries and imported goods from 151 countries.
While the United Kingdom is, by far, Utah's biggest export partner, the next three biggest are those targeted by the Trump tariffs — Canada, China and Mexico. The U.K. received $7.2 billion worth of Utah goods in 2023 or 41.2% of total exports.
Approximately $6.8 billion of the exports to the U.K. stem from unwrought gold, much of it sourced from Rio Tinto Kennecott operations in the state. Canada received $1.7 billion in Utah goods in 2023, Mexico $1.3 billion and China $1.2 billion, according to the Gardner report.
Mexico, Canada and China are also Utah's biggest import origin countries, sending Utah $4.8 billion, $3.1 billion and $2.7 billion worth of goods, respectively, in 2023.
While Utah's export value grew by nearly 5% from 2022 to 2023, import volumes have been increasing at a faster pace the last decade and reached $18.6 billion in 2023, resulting in a state-level trade deficit of $1.2 billion.
