Trump’s Tariff Tsunami: 100% Drug Tax and New Import Levies Rock Global Trade

100% Tariff on Pharma Imports: President Donald Trump is imposing a 100% import tariff on all branded or patented pharmaceutical drugs starting October 1, unless the manufacturer has begun building a U.S. production facility ^[1]. Generic drugs are exempt, and any company “breaking ground” on a U.S. plant won’t face the duty ^[2].
New Taxes on Trucks & Furniture: Washington will simultaneously apply a 25% import tax on all heavy-duty trucks, a 50% tariff on kitchen and bathroom cabinets, and a 30% tariff on upholstered furniture, with all the new duties effective from October 1 ^[3] ^[4]. Trump announced these industry-focused measures on his Truth Social platform.
Trump’s Rationale – “Flooded” Markets & Security: Trump justified the move by citing “the large scale ‘FLOODING’” of foreign goods into the U.S., which he argues hurts American manufacturers ^[5]. He claimed the heavy truck tariff will protect U.S. firms from “unfair outside competition” and benefit domestic makers like Peterbilt and Mack Trucks ^[6] ^[7]. “We need our truckers to be financially healthy and strong…for National Security purposes,” Trump wrote ^[8].
Part of Escalating Trade War: These tariffs expand Trump’s hardline “America First” trade policy in his second term. In early August, he already slapped sweeping tariffs on imports from over 90 countries (with baseline rates up to 50% on some nations) ^[9] ^[10]. He had also previously targeted specific sectors with tariffs on steel, aluminum, copper, automobiles and parts ^[11]. The latest salvo uses Section 232 national security justifications, amid legal challenges to Trump’s broader global tariffs in U.S. courts ^[12].
Major Exporters Affected – EU Tariffs Capped at 15%: The new 100% pharma tariff threatens major drug exporters to the U.S. like Ireland, Germany, Switzerland, Japan and the UK ^[13]. However, a recent preliminary EU-U.S. trade deal appears to cap any U.S. tariff on European pharmaceutical exports at 15% ^[14] ^[15]. EU officials stressed this 15% ceiling “remains the case” despite Trump’s announcement ^[16]. Japan likewise said its trade agreement ensures its pharma tariffs won’t exceed those of the EU ^[17].
UK and Allies Push Back: The UK – which exported over $6 billion (£4.5 billion) in pharmaceuticals to the U.S. last year – voiced concern. “We know this will be concerning for industry,” a British government spokesperson said, noting the UK is “actively engaging” with Washington and pressing for an outcome that protects the vital pharma sector ^[18] ^[19]. Mexico and Canada, key suppliers of truck parts and vehicles, have also formally objected to new auto-related tariffs, arguing they are U.S. allies and pose no security threat ^[20] ^[21].
Pharma Industry on a Rollercoaster: Speculation over drug tariffs sent pharmaceutical stocks on a “rollercoaster ride” in recent months ^[22]. The sector has been under pressure in the U.S., UK, and Europe, with uncertainty over tariffs “keeping a cloud over the sector for a while,” according to Jane Sydenham of Rathbones ^[23]. On the news, Asian pharma shares fell sharply, though European drugmakers largely steadied after learning EU exports may face at most a 15% tariff ^[24] ^[25]. Many big pharma firms have already built plants or pledged large investments in the U.S., which could spare them from the 100% levy ^[26] ^[27].
Truck Tariffs Hit Supply Chains: The 25% duty on big trucks is meant to lift U.S. manufacturers (like Paccar’s Peterbilt/Kenworth and Daimler’s Freightliner) ^[28] ^[29]. But industry groups warn it will also raise costs: the U.S. Chamber of Commerce noted that parts for commercial trucks are sourced “overwhelmingly” from close allies – 78% of U.S. heavy truck imports come from Mexico alone ^[30] ^[31]. The Chamber called it “impractical” to replace these foreign supply chains domestically without driving up prices for manufacturers and consumers ^[32] ^[33].
Experts Warn of Higher Prices: Trade experts say the tariffs may help some U.S. factories but will hurt consumers with higher prices. “The new tariffs favor domestic producers but are ‘terrible’ for consumers as prices are likely to rise,” said Deborah Elms of the Hinrich Foundation ^[34]. She noted these product-specific levies cover more products at higher rates than Trump’s earlier “reciprocal” tariffs (which were aimed at trade imbalances) ^[35]. Elms added that the industry-focused import taxes could be a “back-up plan” to secure revenue if Trump’s broader global tariffs get struck down in court ^[36].

Trump’s New Tariff Salvo: Drugs, Trucks and Cabinets Under Fire

In a dramatic escalation of his trade war, President Donald Trump on Thursday unveiled a new wave of tariffs targeting pharmaceuticals, trucks, and home furnishings. In a Truth Social post on September 25, Trump announced the U.S. will impose a 100% import tariff on any branded or patented pharmaceutical products starting October 1 – effectively doubling their price – “unless a company is building a manufacturing plant in the U.S.” ^[37]. “There will, therefore, be no Tariff on these pharmaceutical products if construction has started,” Trump clarified, incentivizing drugmakers to produce domestically ^[38].

Trump’s post also detailed steep duties on other imports: a 25% tariff on all heavy-duty truck imports, a 50% levy on kitchen cabinets and bathroom vanities, and a 30% tariff on upholstered furniture ^[39] ^[40]. All of these take effect on October 1, just days after the announcement. Bathroom vanities and cabinets were singled out due to a “huge” surge in imports that Trump says is hurting U.S. wood cabinet makers, while the furniture tariff aims to “bring back America’s furniture business” after years of offshoring ^[41].

Trump framed the tariffs as necessary to defend domestic industries from an onslaught of cheap imports. “The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside countries,” he wrote, arguing that foreign exporters have undercut American manufacturers ^[42]. He cast the truck import tax as vital for U.S. security, claiming truck makers like Peterbilt, Kenworth and Mack will now be “protected from the onslaught of outside interruptions” and “unfair outside competition” ^[43] ^[44]. “We need our Truckers to be financially healthy and strong, for many reasons, but above all else, for National Security purposes,” Trump added emphatically ^[45]. In the case of furniture, Trump similarly argued that foreign-made cabinets and sofas have “flooded” the market and asserted that tariffs will help repatriate jobs in the long-hollowed-out U.S. furniture industry.

These moves follow Trump’s pattern of aggressive protectionism since returning to the White House. Tariffs have become a signature tool of his “America First” agenda in his second term. In fact, this new industry-specific salvo comes on the heels of sweeping global tariffs Trump imposed in early August, when his administration slapped baseline duties on imports from over 90 countries ^[46] ^[47]. Those August “reciprocal tariffs” included across-the-board rates (reportedly around 10% on many countries, with higher penalties on others) aimed at nations running large trade surpluses with the U.S. – a move analysts called the most dramatic turn toward U.S. protectionism since the 1930s ^[48] ^[49]. Trump has also not hesitated to target individual sectors: earlier this year he invoked national security (Section 232) to investigate or levy tariffs on steel, aluminum, copper, autos and components ^[50].

What’s notable about the latest announcement is the targeted, product-specific nature of the tariffs. Rather than broad country-by-country duties, these focus on particular industries – pharmaceuticals, heavy trucks, and furniture – where Trump claims U.S. producers need urgent relief. This strategy may be driven in part by legal considerations. Trump’s sweeping global tariffs have been challenged in U.S. courts, and the Supreme Court is set to hear a case on their legality under trade law ^[51]. In the meantime, shifting to narrower tariffs justified by national security or “market flooding” could be a way to secure tariff revenue and pressure trading partners without running afoul of the courts ^[52]. Trade expert Deborah Elms noted that these new industry-specific import taxes cover more products at higher rates than even Trump’s earlier tariffs aimed at trade imbalances, suggesting “a back-up plan to secure revenues” if the broader measures get struck down ^[53]. In short, Trump appears to be doubling down on tariffs through every available channel.

Pharma Industry Braces for 100% Drug Tariff

Trump’s move to slap a 100% tax on imported branded drugs sent shockwaves through the global pharmaceutical industry. Such a hefty tariff on medicines is virtually unprecedented. The U.S. imported about $233 billion in pharmaceutical and medicinal products in 2024 ^[54], so a 100% duty could theoretically double the cost of a large share of that vital supply – a cost likely passed on to consumers or healthcare providers. Americans already pay some of the highest prices for prescription drugs in the world, and advocacy groups warn this will only worsen. “We are already being crushed by the highest prescription drug costs in the world and this will cause them to skyrocket further,” said the science advocacy group 314 Action, adding bluntly that if Trump follows through “people across the country will die” due to patients forgoing essential medicines ^[55].

Drugmakers have been nervously anticipating possible pharma tariffs for months. Jane Sydenham, investment director at UK firm Rathbones, described the sector’s recent experience as a “rollercoaster ride” amid conflicting tariff speculation ^[56]. “Nobody likes uncertainty, and that’s been keeping a cloud over the sector for a while,” she told the BBC, noting that pharmaceutical share prices in the US, UK and Europe have been under pressure. Those clouds lifted slightly after Trump’s announcement clarified some key exemptions: notably, generic (non-branded) drugs are exempt, and companies that have begun building U.S. manufacturing facilities will also escape the 100% tariff ^[57] ^[58]. This means many of the world’s largest pharma firms may not actually face a full 100% hike on their products. “It’s not quite as big a move as it appears at first sight,” observed Neil Shearing, chief economist at Capital Economics ^[59]. Thanks to the exemptions, “many of the world’s largest pharmaceutical companies either already have some production in the US or have announced plans to build production in the near future,” Shearing explained ^[60]. Indeed, in just the past year, several pharma giants – AstraZeneca, Roche, Novartis, Eli Lilly, Johnson & Johnson, to name a few – have unveiled plans to invest heavily in U.S. drug manufacturing or expansion ^[61]. Swiss drugmaker Roche, for example, noted that its Genentech unit “recently started work” on a new U.S. facility, effectively breaking ground and qualifying for an exemption ^[62] ^[63].

These investments were not coincidental; they were prompted by Trump’s earlier tariff threats. Trump had long threatened to punish drugmakers unless they produced more in America. Over the summer, he floated the idea of phasing in pharma tariffs, at one point telling CNBC he might start with a small tariff and ratchet up to “150% and even 250%” over time if companies didn’t relocate production ^[64]. That saber-rattling spurred companies into action and likely softened the immediate blow of the 100% tariff announcement. Analysts say markets had partly priced in the risk of drug tariffs, which tempered the stock sell-off when the official news hit ^[65]. By Friday (Sept 26), shares of major European pharma firms like Roche, Novartis, Novo Nordisk and AstraZeneca initially dipped 1–2% but then largely recovered ^[66] ^[67]. Asian pharmaceutical stocks, however, fell more sharply – Japan’s Sumitomo Pharma dropped ~4.6%, and Australia’s CSL nearly 2% – reflecting their heavy U.S. export exposure and focus on branded products ^[68] ^[69].

Crucially, U.S. allies in Europe are confident that Trump’s tariff won’t be allowed to reach 100% for their exports. In August, the EU and U.S. struck a preliminary trade framework amid Trump’s tariff blitz, explicitly agreeing to cap any tariffs on pharmaceuticals (and semiconductors) at 15% for EU-origin goods ^[70] ^[71]. This was part of an effort to calm transatlantic trade tensions. After Trump’s latest announcement, European officials quickly reminded him of that cap. “Any new tariffs announced by the US on pharmaceuticals under its Section 232 investigation would be capped at 15% for pharma products being exported by the EU,” Ireland’s Tánaiste (Deputy PM) Simon Harris emphasized on September 26 ^[72]. “This remains the case and underlines the value of the agreement reached last month,” Harris said, adding that Dublin and other EU members will study the impact of Trump’s move ^[73]. An EU trade spokesperson in Brussels echoed that message, calling the 15% ceiling an “insurance policy that no higher tariffs will emerge” on European medicines ^[74]. In practice, this could shield big European drug exporters like Germany (where about 25% of pharma exports go to the U.S. ^[75]) and Ireland (which has a massive U.S.-oriented pharma manufacturing sector) from the worst-case scenario. Notably, Ireland’s pharmaceutical industry took preemptive action this year: fearing looming tariffs, Ireland’s pharma companies “frontloaded” exports to the U.S., shipping as much product as possible before any tariff hit. In fact, Irish exports of medicinal and pharmaceutical goods surged over 500% year-on-year in the first seven months of 2025 as firms rushed to beat Trump’s trade barriers ^[76] ^[77].

Despite these reassurances, uncertainty remains for other countries. Japan, for instance, is not covered by the EU deal but has its own agreement with the U.S. Trade negotiator Ryosei Akazawa said Japan’s pact ensures its tariff rates “will not exceed” those imposed on other countries like the EU ^[78]. Major Japanese drug firms (Takeda, Daiichi Sankyo, etc.) focus heavily on the U.S. market but also often produce through U.S. subsidiaries, which might spare them. The UK, post-Brexit, is in a particularly delicate spot. The UK pharmaceutical sector exported over $6 billion to the U.S. last year ^[79], making the U.S. its largest single customer. As a non-EU country, the UK doesn’t automatically benefit from the EU’s tariff cap deal, though Trump had previously hinted at giving the UK “preferential treatment” on drug tariffs ^[80]. So far, however, no formal exemption for the UK has been confirmed. The British government responded to Trump’s announcement with concern: “Sectors such as pharmaceuticals are critical to our economy… we will continue to press the U.S. for outcomes that reflect the strength of our relationship and deliver real benefits for UK industry,” a UK spokesperson said ^[81] ^[82]. In diplomatic terms, London is scrambling to either secure an exemption or at least ensure any tariff is far below 100%. Until that clarity comes, British pharma firms like AstraZeneca and GSK are facing some investor jitters – AstraZeneca’s stock opened about 1.4% down in London on the news ^[83] ^[84] (though one analyst noted AstraZeneca’s large planned U.S. investments might put it “better placed than some European rivals” to avoid penalties ^[85]).

From the patient and consumer perspective, the pharma tariffs raise alarms about drug affordability and supply. U.S. importers will have to pay the tariff on medicines, and those costs could flow through to hospital systems, insurers, or patients. “Immediate price hikes, strained insurance systems, hospital shortages, and the real risk of patients rationing or foregoing essential medicines” could result, warned Pascal Chan of the Canadian Chamber of Commerce ^[86]. The U.S. government itself would face higher costs for Medicare and VA health programs if drug prices spike ^[87] ^[88]. The European Federation of Pharmaceutical Industries and Associations (EFPIA) said “urgent discussions” are needed with Washington, as tariffs on medicines could “increase costs, disrupt supply chains and prevent patients from getting life-saving treatments” ^[89]. For now, the 100% tariff threat looms, but many moving pieces – exemptions, trade deals, legal challenges – will determine how much it truly bites.

Heavy Trucks: Tariff Aims to Boost U.S. Makers but Risks Backfiring

Trump’s 25% import tariff on heavy-duty trucks is explicitly aimed at bolstering American truck manufacturers, but it underscores a core dilemma of his tariff strategy: global supply chains are deeply entrenched. On paper, the tariff is a protective shield for U.S. companies like Peterbilt and Kenworth (makers of iconic big rigs, both owned by PACCAR) and Freightliner (owned by Daimler Truck) ^[90] ^[91]. Trump declared that these firms “will be protected” from foreign competition under the new policy ^[92]. The administration points to a decline in U.S. commercial vehicle production and jobs – employment in U.S. furniture and wood products manufacturing (a related sector) has halved since 2000 ^[93] ^[94], and similar pressures exist in vehicle manufacturing – as justification to intervene. By making imported trucks more expensive, the White House hopes to give domestic producers a bigger share of the U.S. market.

However, the heavy truck supply chain is truly global, and that’s where the 25% tariff may have unintended consequences. The largest source of America’s big truck imports is its neighbor and USMCA trade partner, Mexico. In fact, the U.S. sources about 78% of its imported medium and heavy trucks from Mexico, and another ~15% from Canada ^[95] ^[96]. Mexico’s exports of large trucks to the U.S. have skyrocketed in recent years – one study noted imports of heavy vehicles from Mexico tripled between 2019 and 2023 ^[97] ^[98]. Additionally, Mexico is a major hub for truck parts: last year the U.S. imported almost $128 billion worth of heavy vehicle parts from Mexico, roughly 28% of all U.S. imports in that category ^[99] ^[100]. Canada and Japan are also significant suppliers of trucks and components.

Crucially, many “American” trucks rely on foreign-made components. Modern trucks assembled in the U.S. often include engines, transmissions, axles, electronics, and other parts sourced from around the world (especially from Mexico and Canada under integrated North American supply chains). The U.S. Chamber of Commerce publicly urged the administration “not to impose new tariffs” on heavy trucks for this reason ^[101]. It warned that many truck parts are made “overwhelmingly” in allied countries – “all of which are allies or close partners… posing no threat to U.S. national security” ^[102] ^[103] – and that it’s “impractical” to expect companies to replace those suppliers quickly or at reasonable cost ^[104] ^[105]. For example, Stellantis (Chrysler) builds popular heavy-duty Ram pickup trucks in Mexico, and Volvo Group (parent of Mack Trucks) is currently building a $700 million truck factory in Monterrey, Mexico, set to open in 2026 ^[106] ^[107]. Those investments were made under the assumption of free trade within North America. Now, unless there are exemptions in the final rules, trucks coming out of those Mexican plants could face a 25% hurdle at the U.S. border, potentially raising their cost dramatically or forcing production to shift. “A key question is whether there will be exemptions for USMCA-compliant products,” economist Neil Shearing noted, referring to the U.S.–Mexico–Canada Agreement ^[108] ^[109]. Most of Trump’s product-specific tariffs so far (like those on steel and aluminum) have not exempted USMCA neighbors, so if the truck tariff follows suit, “Mexico will be most heavily affected,” Shearing said ^[110].

Mexico’s government has voiced strong opposition. As far back as May, during the U.S. Commerce Department’s investigation into truck imports, Mexico argued that its exported trucks have ~50% U.S.-made content (e.g. American-made engines) ^[111] ^[112], highlighting how intertwined the supply chain is. Mexican officials insist that far from harming U.S. security, their exports actually support American jobs in parts manufacturing. Imposing tariffs, they say, will hurt both sides of the border. With Trump moving ahead, Mexico may seek to challenge the truck tariffs under USMCA dispute mechanisms, or possibly retaliate on other goods if the situation escalates.

For American businesses and consumers, the truck tariffs could have ripple effects. Higher costs for trucks can translate into higher freight and shipping costs across the economy. Trucking companies facing pricier rigs may delay fleet upgrades or pass costs on through higher haulage rates. As the Federal Reserve’s Jerome Powell cautiously noted, goods prices were already creeping up due in part to earlier tariffs; a new round of import taxes could add to inflationary pressure at a time when the U.S. is striving to curb inflation ^[113] ^[114]. It’s an ironic twist: Trump touts tariffs as a way to boost domestic production and jobs, but by raising input costs, they can also make end products and transportation more expensive for American families.

Financial markets quickly sniffed out this concern. Shares of global truck makers slid on the tariff news. In Europe, Germany’s Daimler Truck stock fell ~4%, and Traton (which owns Scania, MAN, and Navistar) dropped ~2% the next day ^[115] ^[116]. Investors anticipate that a 25% U.S. import tax could dent foreign manufacturers’ sales or force them to absorb costs to stay competitive. On the flip side, shares of PACCAR (parent of Peterbilt/Kenworth) and Navistar saw modest gains, as domestic-oriented producers are seen as relative winners if imports are curtailed ^[117]. Still, even U.S. truck makers could feel a squeeze if key components they import now face tariffs. The complexity of modern manufacturing means the tariff’s impact won’t be black-and-white – it will ripple through various suppliers and possibly hit U.S. firms that rely on imported parts.

Given these dynamics, many observers are skeptical that the truck tariff alone will restore American dominance in heavy vehicle manufacturing. It might help U.S. companies’ pricing in their home market, but at the cost of efficiency. As one trade expert quipped, “You can’t just magic a supply chain overnight – if we could make all these parts here profitably, we’d already be doing it.” In the short term, the tariff looks likely to raise costs for U.S. truck buyers (including logistics companies, construction firms, and other truck operators) and strain relations with key allies, without a clear path to significantly higher U.S. truck production.

Cabinets, Furniture and the Home Goods Crackdown

The third prong of Trump’s tariff offensive is aimed at the furniture and home cabinetry sector – a more unexpected target in the trade war. The President announced hefty 50% tariffs on imported kitchen cabinets and bathroom vanities, plus a 30% tariff on imported upholstered furniture (sofas, couches, armchairs and the like) ^[118] ^[119]. These duties also kick in on October 1, alongside the pharma and truck measures. Trump’s justification here is the claim that imports have “flooded” the U.S. furniture and cabinet market, driving local manufacturers out of business ^[120] ^[121].

It’s true that American furniture-making has seen a steep decline over the past two decades. Once a thriving industry in states like North Carolina and Michigan, furniture manufacturing has been hollowed out by offshoring, especially to China and South-East Asia. U.S. furniture imports hit $25.5 billion in 2024, up 7% from the prior year ^[122] ^[123]. An estimated 60% of those imports came from Vietnam and China ^[124] ^[125], where lower labor costs have made them dominant suppliers of wooden cabinets and upholstered sofas to American retailers. Meanwhile, employment in U.S. furniture and related industries has plummeted – now around 340,000 workers, roughly half of the level in the year 2000 ^[126] ^[127]. These statistics underline why the administration sees the sector as beleaguered and in need of relief.

However, hitting furniture imports with tariffs is not without controversy. For one, it will directly affect consumer prices on household goods. Furniture is a discretionary purchase for many families, and prices are highly sensitive. A 30% tariff on a foreign-made sofa could easily add hundreds of dollars to the retail price tag. Vietnamese and Chinese furniture exporters will either have to lower their prices to keep U.S. customers, or more likely, U.S. importers will pass on some of the cost to consumers. “Many of our members were shocked when we heard the news. I think the decision on the additional tariff is unfair,” said Nguyen Thi Thu Hoai, from the Handicraft and Wood Industry Association in Dong Nai, Vietnam ^[128] ^[129]. Vietnam in recent years became the #1 foreign source of wooden furniture to the U.S. (partly after Trump’s earlier China tariffs prompted importers to shift to Vietnam). Now Vietnamese manufacturers fear losing business or margins due to the steep duties. The American Home Furnishings Alliance, representing U.S. furniture importers and retailers, has similarly criticized blanket tariffs in the past, arguing that they punish consumers and do little to address the root causes (since automation and high labor costs, not just trade, contributed to U.S. job losses in furniture).

From a trade standpoint, the cabinet and furniture tariffs also raise the question of retaliation and global trade rules. While the U.S. can impose tariffs under claims of national security or “market disruption,” affected countries could challenge these tariffs at the World Trade Organization (WTO). Under Trump’s first term, several of his tariffs (on steel, for example) were brought to the WTO and found to violate rules, though the U.S. often appealed or ignored the rulings. With the WTO’s appellate body currently defunct, immediate legal resolution is unlikely, but the conflict adds to global trade tensions. Countries like China and Vietnam may respond by seeking other markets or by imposing their own tariffs on U.S. goods (though their options to retaliate specifically for furniture might be limited).

For now, the immediate effect domestically will likely be higher prices on home renovation goods. Homebuilders and contractors that source imported cabinets or vanities for new housing projects will face costlier materials, potentially trickling down to home prices or renovation costs for consumers. It’s essentially a tax on any American buying imported cabinetry or furniture. The timing is also notable: the housing and construction market is sensitive as the Federal Reserve has raised interest rates. Extra costs for materials could further dampen new construction or remodeling activity.

On the flip side, U.S. cabinet and furniture manufacturers (a number of which still exist, particularly smaller specialty firms) have welcomed the tariffs. They have long complained about underpriced imports. Some U.S. cabinetmakers filed an antidumping case a few years ago against Chinese cabinets, which led to duties – but China and Vietnam circumvented some of those by shifting production. A broad 50% tariff could finally give them breathing room to reclaim market share. Whether that results in a notable uptick in American manufacturing jobs is uncertain. Factories would need to scale up production and hire workers – not trivial tasks – and they’ll be cautious about doing so if tariffs could be temporary or if importers find other loopholes (for example, importing parts and assembling in the U.S. to avoid the tariff). Still, for communities in states like North Carolina’s furniture belt, Trump’s action is seen as a long-awaited victory. The political subtext is also important: tariffs on home goods like cabinets and furniture play well to Trump’s blue-collar base, signaling that he is fighting for jobs even in smaller industries, not just headline sectors like steel or autos.

Domestic Backlash and Economic Impact

Despite Trump’s confident tone, the response from many U.S. businesses and economists has been wary, if not outright critical. U.S. businesses have repeatedly expressed fatigue with the constant trade policy shifts. Earlier in 2025, the U.S. Chamber of Commerce – representing thousands of companies – implored the White House to refrain from any new tariffs, arguing that American firms and consumers bear the brunt of the costs ^[130] ^[131]. After Trump’s latest announcement, that warning seems prescient. By the Chamber’s analysis, industries like trucking will see higher input costs, and consumers will see higher shelf prices. “Tariffs are taxes, plain and simple,” as the Chamber often points out.

Beyond the direct industry effects, there is a broader macroeconomic concern: inflation. The U.S. is in a delicate spot, trying to tame inflation that spiked in 2022–2023. Tariffs can act like a tax on consumption, potentially adding to inflation indices. Federal Reserve Chair Jerome Powell noted in a recent press conference that goods inflation had ticked up, and “higher costs for goods” – partly due to supply issues and tariffs – accounted for “most” of the inflation rise earlier this year ^[132] ^[133]. While one can debate the magnitude of tariffs’ impact on prices, there’s little doubt they push upward on certain categories (for example, appliances got more expensive after steel tariffs, washing machines after specific tariffs, etc.). Now with pharmaceuticals, vehicles, and furniture in the crosshairs, a wide range of prices could be affected. It’s a trade-off between protecting certain jobs versus raising costs economy-wide. Deborah Elms of Hinrich Foundation emphasizes that the new tariffs, while helping some domestic producers, are “terrible for consumers” because they will raise prices broadly ^[134]. And notably, tariff revenues (basically taxes collected at the border) ultimately come from U.S. importers. Treasury Secretary Scott Bessent has touted tariffs as a lucrative revenue source – projecting Washington could collect $300 billion by year-end ^[135] ^[136] – but that money is effectively coming out of Americans’ pockets in the form of higher costs.

Politically, Trump is doubling down on a strategy he believes helped him win support in industrial states. He has framed tariffs as a way to bring back jobs, pressure other countries, and re-balance trade. During his first term, he used tariff threats to push trading partners into new deals (e.g. the USMCA replaced NAFTA, a phase-1 trade deal with China was signed). In this second term, he has gone even further, not shying away from angering allies. “Trump has made the levies a key foreign policy tool,” Reuters noted, using them to extract concessions and exert pressure globally ^[137]. We see this in how the administration opened a dozen new Section 232 national security probes recently – investigating imports of everything from wind turbines and semiconductors to copper and critical minerals – which could pave the way for yet more tariffs ^[138]. It’s a sweeping agenda that is redrawing the landscape of U.S. trade relations.

However, this approach is testing the patience of allies and the limits of U.S. law. Many of Trump’s earlier tariffs (like the blanket “reciprocal” tariffs on dozens of countries) are facing legal challenges domestically. The Supreme Court has scheduled arguments to review whether the President overstepped authority by imposing global tariffs unilaterally ^[139]. That case could potentially curtail Trump’s freedom to use tariffs so expansively. In anticipation, the White House seems to be leaning more on Section 232 of the Trade Expansion Act, which grants the President broad leeway to restrict imports for national security reasons. By justifying truck, steel, aluminum, and possibly pharmaceutical tariffs under “national security,” Trump puts them on stronger legal footing (though critics find the national security claim thin for goods like kitchen cabinets or medicines from allies). If the courts knock down his other tariffs, the targeted tariffs like these new ones could remain as his Plan B, as Deborah Elms observed ^[140].

Internationally, there is a risk of retaliation and trade fragmentation. The EU, UK, Canada, Japan, and others are monitoring these moves closely. The EU has said it will respond if its interests are harmed beyond the agreed 15% cap. China, which isn’t directly singled out in this round (since China mainly exports furniture among these categories), could still take offense at the general tariff stance. Over the past years, China and the EU have forged closer trade ties with each other and other partners, partly in response to U.S. protectionism. If Trump continues down this path, we could see a more bifurcated global trading system, with the U.S. raising walls and others forming blocs to bypass American markets.

For now, much depends on negotiations behind the scenes. U.S. officials signaled willingness to exclude certain allies or specific products – for example, possibly allowing some quota of imports before tariffs kick in, or granting country-specific exemptions (as was done briefly in 2018 for steel tariffs for a few allies). The coming days will involve intense talks: EU diplomats, British trade reps, Japanese negotiators, and North American officials will be pressing Washington for relief. Already, the EU-US joint statement of August gives Europe some confidence of restraint on pharma tariffs ^[141], and one could imagine a similar understanding could be sought for, say, medical devices or other sectors under investigation.

In summary, Trump’s latest tariffs on drugs, trucks, and furniture represent a major escalation in his trade war, targeting not just rival economies but some of America’s closest trading partners. The measures promise to reshape supply chains – encouraging pharmaceutical and auto firms to localize production in the U.S. – but at the cost of higher prices and strained alliances. Markets and businesses are already feeling the whiplash, as seen by volatile stock prices and urgent pleas from industry groups. Whether this bold gambit yields a net win for U.S. workers, or whether it backfires by stoking inflation and foreign retaliation, remains to be seen. What is clear is that the world’s largest economy has lurched further toward protectionism, marking a definitive break from the free-trade consensus of past decades. As one analyst put it, Trump’s tariff campaign is “worse than the worst-case scenario” many investors imagined ^[142] ^[143] – a risky economic experiment that is now unfolding in real time on a global scale.

Sources:

Reuters – “Trump slaps new US tariffs on drugs, trucks and furniture” ^[144] ^[145]
Reuters – “Trump announces 100% tariff on imports of branded or patented pharmaceuticals from October 1” ^[146]
Reuters – “EU pharma stocks mostly steady after Asian falls on Trump tariffs” ^[147] ^[148]
BBC News – “Trump announces new tariffs on drugs, trucks and cabinets” (via Kahawatungu) ^[149] ^[150]
The Guardian – “Trump says US will impose new tariffs on heavy trucks, drugs and kitchen cabinets” ^[151] ^[152]
The Guardian (Business Live) – UK government & market reactions ^[153] ^[154]
London Loves Business – “Trump escalates trade fight with new tariffs on drugs and trucks” ^[155] ^[156]
Al Jazeera – “‘Worse than worst-case scenario’: Trump’s tariffs send markets reeling” ^[157]