Trump's next trick: 25 percent tariffs on cars, medicines and semiconductors from April - later even "substantially more"

Neue Zürcher Zeitung Germany Trump's next trick: 25 percent tariffs on cars, medicines and semiconductors from April - later even "substantially more" André Müller, New York • 10 hours • 3 minutes reading time The USA wants to impose a tariff of around 25 percent on imported cars. New day, new tariff: Donald Trump announced for the first time on Tuesday evening details of the recently threatened tariffs on pharmaceuticals, cars and semiconductors. Vehicles are to be subject to an import tax "in the vicinity of 25 percent". Imports of medicines and computer chips are also to be subject to this, with tariffs increasing substantially over the course of a year. However, Trump explained that they wanted to give the manufacturers some time. Time to relocate their production to the USA. The door for negotiations seems open The American president made the statements on the sidelines of a short press conference in Mar-a-Lago, Trump's residence in Florida, in which the Ukraine war and other topics were also discussed. Trump did not go into further detail about the tariffs; he announced that he would present the concrete plan on April 2. Many important questions remain unanswered - for example, whether the car tariffs would also apply to the neighboring countries of Mexico and Canada, which Trump had already threatened with import tariffs of 25 percent. Or how these goods-specific tariffs relate to the general "reciprocal" tariffs that the 78-year-old president also announced just last week. The basic assumption seems to be that these goods-specific duties would be levied in addition to the retaliatory tariffs. Trump and his government team will receive delegations from trading partners in the coming weeks and negotiate possible exceptions or bilateral deals. EU Commissioner Maros Sefcovic is among those expected in Washington this week. However, it is difficult for the USA's trading partners to estimate how much room for negotiation they actually have. Trump is deliberately ambiguous about what he wants to achieve with the tariffs in order to confuse the other party. Higher inflation threatens In this respect, the 25 percent is not set in stone, but it should be seen as a first step towards the nominal value. Tariffs of this magnitude would seriously disrupt the price structure and the respective goods markets in the USA and would probably have a strong inflationary effect: import duties are usually paid by the importer and passed on to the customer if possible. The extent to which importers can do this depends on the respective market constellation. It is also unclear how trading partners will react to the new threats. Many are likely to try to prevent a major escalation and, if necessary, introduce retaliatory tariffs that specifically target exports from Republican member states. Smaller, open economies such as Switzerland could even forego countermeasures altogether. However, the risk of escalation is always present in such a large and complex trade dispute. Inflation in the USA is currently still at 3 percent, which is significantly above the target of 2 percent. One recent driver of inflation has been mobility: prices for used cars and car insurance have risen significantly in recent months. If prices for new cars also rise again due to tariffs on steel and aluminum and against Canada and Mexico, this could cause discontent in the USA. Outside of a few major cities, public transport is poorly developed and Americans rely on cars to get to work, for example. At the press conference, Trump referred to a number of "very large companies" that were already planning to relocate their production to the USA. With an unemployment rate of only around 4 percent, however, it will be difficult to find the necessary skilled workers for all these new factories - especially if the USA also allows less qualified immigrants into the country at the same time, as some nationalist forces are demanding. If numerous new factories are actually built in the USA - it is always a long way from a letter of intent to opening - the scarce skilled workers could negotiate significantly higher wages. This would create renewed inflationary pressure. Cumulatively, Trump's tariff ideas could therefore significantly increase inflation, even though he promised lower prices before the elections and at his inauguration. This could be Trump's Achilles heel in the coming trade dispute. Bern is also challenged Switzerland would probably be particularly badly affected by tariffs on pharmaceuticals. They account for 60 percent of all Swiss exports to the USA.