President Donald Trump is planning on imposing significant tariffs on the semiconductor and auto industries. Reportedly, Trump said on Tuesday that he plans to impose tariffs of around 25% on auto imports as well as semiconductors and pharmaceuticals shipped to the United States as early as April 2.

The US semiconductor industry in particular has been engaged in a trade feud of sorts with China, this latest set of tariffs might only fuel the fire. As reported earlier, Trump had already enacted a 10% across-board-tariff on goods coming from China and 25% tariffs on all steel and aluminum imports.

READ: The perils of Trump’s proposed tariff trade war (February 6, 2025)

Trump informed reporters at his Mar-a-Lago resort in Florida that he plans to raise the tariffs on semiconductor chips and drugs even higher in the future.

“It’ll go substantially higher over a course of a year,” he said. But he added that he wanted to give time for potentially affected companies to bring their factories to America to avoid tariffs.

“We want to give them a little bit of a chance,” he said.

This move is part of his broader strategy to strengthen American manufacturing and reduce reliance on foreign goods. The proposal has sparked reactions from countries like China, Canada, and Mexico, which may retaliate with their own tariffs on U.S. products.

What is a tariff?

A tariff is a tax or fee that a government charges on goods imported from other countries. It makes foreign products more expensive, which can encourage people to buy locally made goods instead. Tariffs are often used to protect domestic industries, promote local jobs, and reduce trade imbalances. For example, if a country imposes a tariff on cars from another country, those imported cars will cost more, which might make consumers choose to buy cars made in their own country instead.

READ: Canada, China, Mexico, South Korea, India among 10 countries to be hit by Trump’s tariffs on aluminum, steel (February 11, 2025)

Tariffs can disrupt global trade by increasing the cost of imported goods, leading to higher prices for consumers. They may encourage countries to produce more locally but can also trigger trade wars, where countries retaliate with their own tariffs. This can slow economic growth and harm international relationships.