Trump pledges auto, pharma tariffs soon, hints at reciprocal tariff breaks as nations cut deals

In the latest case of his topsy turvy tariff war, US President Donald Trump has pledged to impose tariffs on automobile and pharmaceuticals soon, but has also sown confusion regarding reciprocal tariffs set to into effect starting next week.

“We’ll be announcing cars very shortly. We already announced steel, as you know, and aluminum. We’ll be announcing pharmaceuticals at some point. because we have to have pharmaceuticals. So we’ll be announcing some of these things in the very near future, not the long future, the very near future,” said Trump on Monday.

Regarding reciprocal tariffs, Trump said he “may give a lot of countries breaks” but added that he may not just match tariffs imposed by others but even apply higher rates. The idea behind reciprocal tariffs is to match the rate that a country imposes on US products. Reciprocal tariffs are expected to be rolled out startign April 2 and will be on a product-by-product and country-by-country basis.

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A number of countries and blocs, such as India, the United Kingdom, and European Union (EU), are currently engaged in talks with the Trump administration and are in the process of cutting deals. These nations are likely to be excluded from the first tranche of reciprocal tariffs that could come as early as April 2. Commentators have said that imposing tailored tariffs on all nations on April 2 would be procedurally hard.

In a note to clients on Friday, UBS economists said that the Trump administration needs to impose as many as 2.5 million tailor-made tariffs on a product-by-product and country-by-country basis under the reciprocal regime and the finalisation of such a regime is unlikely by April 2, according to Forbes.

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The same day, Trump announced 25 per cent tariffs on the purchase of oil and gas from Venezuela from April 2. Separately, he has also pledged tariffs on copper and lumber without specifying a timeline.

On April 2, the monthlong partial waiver to Canada and Mexico from 25 per cent tariffs (except for Canadian oil that’s tariffed at 10 per cent) will also come to an end. It is not known if there would be another pause.