How Significant Will the Impact of Trump's New Round of Tariffs Be?

　　On September 25, US President Donald Trump announced on social media that, starting October 1, import tariffs ranging from 25% to 100% would be imposed on goods such as heavy-duty trucks, building materials, furniture, and patented pharmaceuticals. The pharmaceutical tariffs do not apply to economies that have already reached trade agreements with the US. On September 29, Trump further stated that a 100% tariff would be levied on all films made outside the United States. Additionally, in early September, the US Department of Commerce announced it had initiated an investigation into imports of robotics, industrial machinery, and medical equipment under Section 232 of the Trade Expansion Act.

　　"For instance, the 100% tariff on patented pharmaceuticals this time reflects the concerns of Republican lawmakers during the pandemic – the disruption of the US medical supply chain. However, given that the US cannot fully replace the international pharmaceutical supply chain, some products will likely receive exemptions," Cedric Chehab, Chief Economist at BMI, a research firm under Fitch Solutions, told Jiemian News.

　　Luo Zhenxing, Director of the Economic Research Office at the Institute of American Studies, Chinese Academy of Social Sciences, also told Jiemian News that compared to 'reciprocal tariffs' which affect overall trade, sector-specific tariffs target a particular industry and thus have a relatively smaller negative impact. Furthermore, sectoral tariffs face two major constraints: first, opposition from domestic interest groups in the US, which may lead to modifications or exemptions; and second, negative performance in financial markets.

　　Starting in April this year, Trump invoked the International Emergency Economic Powers Act (IEEPA) to introduce 'reciprocal tariffs,' imposing additional tariffs of 10% to 25% on dozens of trading partners. However, this policy is facing domestic legal challenges in the US. At the end of May, the US Court of International Trade ruled that Trump did not have the authority under IEEPA to impose reciprocal tariffs, fentanyl tariffs, etc., and prohibited their enforcement. Subsequently, the Trump administration appealed to the Federal Circuit Court of Appeals, which suspended the aforementioned injunction. On August 29, the Federal Circuit Court of Appeals upheld the May ruling of the Court of International Trade with a 7-4 vote. The Trump administration has already appealed to the US Supreme Court.