New Delhi: After imposing a 100% tariff on pharmaceuticals, Trump is now considering a new tariff plan. A Reuters report claims that Trump is considering a new tariff plan on electrical goods, based on the number of chips embedded in them. However, no official details have been released yet, making this plan subject to change.
Might lead to higher global inflation
If these tariffs are imposed, electrical goods—from laptops to toothbrushes—will be affected, potentially leading to higher global inflation. The income of semiconductor companies will also be affected. This could increase commodity prices, especially at a time when the USA is grappling with inflation, which is currently above the Federal Reserve’s target and rising.
Economists said that the tariff hike will also make domestically produced goods more expensive, as input costs will rise. This could lead to higher inflation for ordinary people.
100% tariff on semiconductors
Reuters reported that White House spokesman Kush Desai said the USA cannot rely on imports for semiconductor products essential to its national and economic security. He further stated that the Trump administration is adopting a holistic, multi-pronged approach to attract manufacturing companies back to the US, including tariffs, tax cuts, deregulation, and energy incentives.
The exact rates and potential exemptions for chip-based products subject to tariffs have yet to be determined. Trump has already promised a 100% tariff on semiconductor imports, while exempting companies that produce in the US or wish to do so. Taiwan Semiconductor Manufacturing Company and Samsung Electronics are among the largest foreign suppliers.
Concerns about semiconductors
Reuters reported that another source said the Commerce Department is considering imposing a 25% tax on chip-related materials in imported equipment and a 15% tax on electronics imported from Japan and the European Union. However, these figures are preliminary. Officials have also considered providing a per-dollar rebate tied to the investment in a US plant if a company shifts its base production to the US.
According to sources, the Commerce Department initially proposed exempting chip manufacturing equipment to prevent damage to US semiconductor production, but the White House withdrew the proposal, citing President Trump’s resistance to concessions.
HIGHLIGHTS
- After pharmaceuticals, Trump is planning tariffs on these goods.
- Trump is now considering a new tariff plan on electrical goods.
- Electrical goods, from laptops to toothbrushes, will be affected.
- The income of semiconductor companies will also be affected.
This could increase commodity prices, especially at a time when the USA is grappling with inflation, which is currently above the Federal Reserve’s target and rising. Economists said that the tariff hike will also make domestically produced goods more expensive, as input costs will rise.
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