Trump Enacts Reciprocal Tariffs on Trading Partners
These taxes on goods—with the potential to take effect in weeks or months—will vary by country, but rates could depend on regulations, industry subsidies, and other factors.
Earlier this afternoon, President Trump revealed a plan in which the United States would match the tax rates of what trading partners also charge on imports, as a way to balance the trade scales, according to a report published by AP. The timeline for these reciprocal tariffs to be completed could range from weeks to a few months.
Being that each country could impose different tariffs on certain goods, the move would be tailored for each nation and could have the potential to open up the door for rate negotiations.
The proclamation noted that value-added taxes— a flat tax that is levied on an item—could be a possible barrier to trade, and ought to be considered in reciprocal tariff calculations, a senior White House official told AP and other news outlets. Tariff rates that other countries are imposing, industry subsidies, underestimating currencies, and regulations are also influences that could help calculate the reciprocal tariffs, all of which, said the official, could help even out the budget deficit that currently stands at $1.9 trillion.2
This news comes after Trump reinstated a 25% steel import tax earlier this week, along with raising the tariff rate on aluminum from 10% to 25%.3 The measures applied to metals coming from all countries, but are not expected to take effect until March 12, if they do end up officially being enacted.
And the week prior, the US president announced a 30-day pause on tariffs on Canada and Mexico, after initially ordering 25% taxes on imports.4 In regard to China, the 10% tax on goods still remains.
“The new tariffs will disrupt the global supply chain for pharmaceuticals and life sciences, especially since a substantial share of active pharmaceutical ingredients (APIs) and raw materials—including packaging components and production equipment come from China,” commented Caroline Shleifer, CEO at RegASK, an AI-driven software company that aims to reduce global regulatory compliance risks and costs, told Pharma Commerce.“Approximately 13% of APIs used in the United States come from China, and which are now subject to a 10% tariff. As a major supplier of critical pharmaceutical ingredients, China's role in the supply chain is significant. Increased raw material costs are likely to tickle down the supply chain, raising overall production expenses.
“The US pharmaceutical sector has long relied on cost-effective international suppliers for APIs and raw materials. With tariffs adding financial burden, domestic manufacturers may face difficulties scaling production to meet internal demand. The US has a robust manufacturing base, but these tariffs may place additional pressure on domestic producers, requiring further investments in capacity and infrastructure to keep up with demand. The increased cost of production may also lead to reductions in research and development investments, potentially delaying innovation, and the market introduction of new therapies. … Pharmaceutical firms from Canada, Mexico, China, and Europe operating in the US will also experience increased cost pressures. While the US market remains attractive due to its regulatory framework and research infrastructure, the higher costs for imported materials may prompt companies to reassess their operational models.”
References
1. Boak J. Trump signs a plan for reciprocal tariffs on US trading partners, ushering in economic uncertainty. AP. February 13, 2025. Accessed February 13, 2025. https://apnews.com/article/trump-tariffs-reciprocal-imports-tax-trade-economy-54c0a26687dc96157d96229068894720
2. Treasury: $1.9 Trillion Deficit in First 11 Months of Fiscal Year. Committee for a Responsible Federal Budget. September 12, 2024. Accessed February 13, 2025. https://www.crfb.org/press-releases/treasury-19-trillion-deficit-first-11-months-fiscal-year#:~:text=The%20United%20States%20borrowed%20%241.9,Statement%20from%20the%20Treasury%20Department.
3. Saraceno N. United States Elevates Tariffs on Steel and Aluminum. Pharmaceutical Commerce. February 11, 2025. Accessed February 13, 2025. https://www.pharmaceuticalcommerce.com/view/united-states-elevates-tariffs-steel-aluminum
4. Saraceno N. Trump Pauses Canada and Mexico Tariffs. Pharmaceutical Commerce. February 4, 2025. Accessed February 13, 2025. https://www.pharmaceuticalcommerce.com/view/trump-pauses-canada-mexico-tariffs
