Trump targeting medicines, semiconductors for tariffs: Updates
The Trump administration is getting ready to impose tariffs on semiconductors and pharmaceuticals, revealing Monday it's moving in that direction with national security investigations into imports from those sectors, according to notices in the Federal Register.
The development comes as the global trading order is still adjusting to a series of levies Trump has instituted − and sometimes withdrawn − over less than two weeks, rocking financial markets.
Pharmaceuticals and semiconductors have been exempt from 10% tariffs set on most imports starting April 5, but Trump had said they would get separate duties. On Sunday he said the tariff rate on semiconductors would be announced in the coming week, though he made room for flexibility with some companies.
Monday's filing showed the investigations began April 1 and the tariffs would be imposed under the authority of Section 232 of the Trade Expansion Act of 1962, which grants the president such power to protect national security.
The U.S. relies heavily on Asian sources like Taiwan for semiconductors − which control electrical currents − and also gets the vast majority of its pharmaceutical ingredients and much of its production from abroad, especially India and China.
Trump sees that reliance as a security issue and believes tariffs can bring more manufacturing to America. Drugmakers say the duties could create shortages and reduce access for patients. Even if they don't, the process would take considerable time.
The Trump administration just days ago unveiled some technology tariff exemptions that include most of the stiff levies Trump levied on Chinese imports such as smartphones, computers and flat screen televisions. The exemptions were a rare piece of good news for the battered financial markets, and U.S. stocks closed higher Monday.
China isn't backing down, steeply increasing its tariff on U.S. goods and choking off the flow of valuable, rare-earth metals and magnets into the U.S.
Trump ponders exemptions from auto tariffs
Trump said he's considering temporary exemptions from his 25% tariffs on the auto industry to give car companies more time to transition to manufacturing in the U.S.
Trump's remarks from the Oval Office came after his administration on April 11 excluded smartphones, computers and other electronics from his steep reciprocal tariffs in a move his economic aides said is only temporary.
"I'm looking at something to help some of the car companies, where they're switching to parts that were made in Canada, Mexico and other places," Trump said April 14. "And they need a little bit of time, because they're going to make them here."
An exemption on some auto tariffs ‒ which include 25% levies on all foreign cars and light trucks as well as some auto parts ‒ could be a major reprieve for automakers as the industry grapples with tariffs that threaten to raise vehicle prices for American consumers. Stock shares of the three largest U.S. automakers, Ford, General Motors and Stellantis, shot up after Trump's comments.
China cuts off flow of minerals. Can US firms step in?
China has suspended exports of many rare-earth minerals and magnets crucial for automakers, aerospace manufacturers, semiconductor companies and military contractors around the world, the New York Times reports. Shipments have been halted from many Chinese ports while the Chinese government drafts a new regulatory system − one that could permanently prevent supplies from reaching American military contractors and other U.S. companies.
“Drones and robotics are widely considered the future of warfare,” James Litinsky, chief executive of MP Materials, the sole U.S.-based rare-earth mining and processing firm, told the Times. "Based on everything we are seeing, the critical inputs for our future supply chain are shut down."
The minerals themselves are not actually rare, but the ability to refine them at scale is, Litinsky said in a post on X. The company announced in January that it had begun commercial production of the magnets and plans to begin supplying magnets to General Motors and other manufacturers by year's end.
China, Vietnam trying to 'screw' US on trade, Trump says
Trump accused China and Vietnam of working to “screw the United States” as leaders from the two communist-run nations signed deals April 14 to strengthen their trade alliance.
Amid an escalating U.S.-China trade war, Chinese President Xi Jinping and Vietnam's top leader, To Lam, met in Hanoi and reached new agreements on supply chains, cooperation over railways and other areas.
Their meeting came after Trump raised tariffs last week on imports from China to 145%, triggering retaliatory tariffs from China on U.S. exports. Vietnam, meanwhile, is among the more than 75 countries that have engaged in negotiations with the Trump administration for trade deals to avoid steep reciprocal tariffs.
"I don't blame China, I don't blame Vietnam. I see they're meeting today. Isn't that wonderful? That's a lovely meeting," Trump said, adding they're "trying to figure out, how do we screw the United States of America?"
Financial markets rally
Financial markets have struggled mightily in recent days, first with a string of announcements placing tariffs on products from certain nations such as Canada, China and Mexico, and on certain products such as steel and aluminum. In ensuing days the number of nations and products rapidly expanded, crushing investors and fueling turmoil in the bond markets.
A series of temporary tariff rollbacks have brought some relief, but uncertainty has prompted concerns of inflation and a possible recession. Aided by the latest tech exemptions and a possible auto industry exemption, U.S. financial markets finished in positive ground Monday.
The blue-chip Dow closed up 0.78%, or 312.08 points, to 40,524.79; the broad S&P 500 added 0.79%, or 42.61 points, to 5,405.97; and the tech-heavy Nasdaq gained 0.64%, or 107.03 points, to 16,831.48.
China position on US trade: 'We will never yield'
China has put civilian government officials in Beijing on “wartime footing” and ordered a diplomatic charm offensive aimed at encouraging other countries to push back against Trump’s tariffs, Reuters reports, citing four people familiar with the matter. Communist Party propaganda officials have played a leading role in framing China’s response, one of the people said, and government spokespeople posted defiant clips on social media featuring former leader Mao Zedong saying “we will never yield.”
Bureaucrats in the foreign affairs and commerce ministries have been ordered to cancel vacation plans and keep mobile phones switched on around the clock, two of the people said. Departments covering the U.S. have also been beefed up, they said.
"This trade war was started by the U.S. and imposed on China," the foreign ministry said in a statement. "If the U.S. really wants to resolve the issue through dialogue and negotiations, it should stop applying extreme pressure. Any dialogue should be established on the basis of equality, mutual respect and mutual benefit." Read more here.
As part of a previously scheduled visit to Vietnam on April 14, Chinese President Xi Jinping called for stronger economic ties between the two countries, which said they have signed dozens of new agreements as they face severe U.S. tariffs.
“The two sides should strengthen cooperation in production and supply chains,” Xi said, according to a story in the newspaper of Vietnam’s Communist Party. Xi also encouraged closer links on artificial intelligence and the green economy.
Tiny Lesotho, hit with onerous tariffs, cuts deal with Musk's Starlink
Lesotho, the small country in southern Africa that was the target of Trump's largest "reciprocal'' tariffs, granted a license to provide satellite internet services to Starlink, a company owned by Trump ally Elon Musk.
The Lesotho Communications Authority said the license would be in place for 10 years. The decision was condemned by civil society groups such as SECTION 2, which advocates for domestic ownership.
Lesotho, with 2 million people and a gross domestic product of a little over $2 billion, hopes to negotiate with the Trump administration over the 50% tariffs it faces, which are now under a 90-day pause.
Billionaire Trump backer: Wait 90 days before bringing 'hammer down' on China
Billionaire investor Bill Ackman, a Trump supporter now at odds with the president over tariffs, called April 13 for a three-month pause on China. Ackman lauded Trump for showing "considerable flexibility" and understanding the challenges U.S. companies face in adapting to the tariffs so rapidly.
China is under pressure to negotiate a deal whether the tariffs take effect immediately or in three months, Ackman said in a post on X. The pause would provide U.S. businesses with time to make supply- chain adjustments while giving China a chance to negotiate a trade deal in good faith, Ackman said.
"If China does not cooperate and negotiate a deal that makes sense for our country, President Trump can bring the hammer down in 90 days," Ackman wrote.
Experts forecast little economic growth this year
Forecasters have a bleak outlook on the U.S. economy because of Trump’s escalating trade war − and they see the odds of a recession as a tossup. The experts predict the economy will nearly stall in 2025, growing 0.8%, down from their projection of 1.7% just last month, according to the average estimate of 46 economists surveyed by Wolters Kluwer Blue Chip Economic Indicators on April 4 and April 7. They estimated there’s a 47% chance of a recession, up from 25% in February.
The poll was conducted after Trump unveiled his reciprocal tariffs on dozens of countries April 2 but before he announced a 90-day pause on duties as high as 50% on all nations other than China on April 9 and exemptions for many electronics products a few days later.
A separate survey of 31 experts this week – 21 of whom responded the day Trump announced the 90-day pause – reveals a similarly dour view, according to the poll by the National Association of Business Economics. They expect the economy to grow just 0.7% this year. Read more here.
− Paul Davidson
It's not just the experts who are worried about the economy
Trump’s approval ratings on the economy and inflation have fallen after weeks of tariff policy twists and turmoil in the stock market, according to a new poll released April 13. The CBS News survey of 2,410 Americans found 44% approved of Trump’s handling of the economy and 40% approved of his handling of inflation, both down 4% from March 30. The president's overall approval rating dropped to 47% this month, down from 50% in March and 53% in February.
More than half of respondents − 59% − rated the state of the U.S. economy as either fairly bad or very bad, and 53% said they feel the economy is getting worse. Read more here.
− Rachel Barber
Contributing: Reuters