Tariff Tracker: New US National Security Inquiries Set to Justify Additional Tariffs

In the midst of the ongoing fluctuations and turmoil surrounding President Donald Trump’s tariff policies, a new investigation has emerged that may lead to additional tariffs on various sectors that were previously exempt. This inquiry is focused on national security and encompasses industries such as semiconductors, pharmaceuticals, and critical minerals.

The implications of this could extend to companies across multiple nations, including China, a significant supplier of rare earth metals that has seen limited exports since the tariff announcements; India, a major exporter of pharmaceutical goods to the United States; and Taiwan, which accounts for over 90% of advanced semiconductor manufacturing.

Pharmaceuticals and semiconductors were initially excluded from the new tariff framework introduced on April 2.

Following the exemption of products like smartphones, computers, and chip manufacturing equipment from most tariffs last week, Trump indicated that this was a temporary arrangement, with plans to categorize these items separately for tariff purposes. He also mentioned that tariffs on semiconductors imported from other countries would be implemented soon.

Regarding semiconductor chips, some technology giants are already adapting to these changes. The investigation into the semiconductor sector aims to assess the impact of imports on U.S. national security, focusing on semiconductors, manufacturing equipment, and related products.

This includes a range of items such as semiconductor substrates, bare wafers, legacy chips, cutting-edge chips, microelectronics, and Surface Mount Equipment (SME) components. “We are examining Semiconductors and the ENTIRE ELECTRONICS SUPPLY CHAIN in the forthcoming National Security Tariff Investigations,” Trump stated on social media.

The Bureau of Industry and Security (BIS), part of the United States Department of Commerce, has initiated a public consultation process to gather input on various issues. These include assessing the capability of domestic semiconductor production to satisfy national demand, the influence of foreign manufacturing and assembly, the effects of foreign government subsidies and unfair trade practices, the potential for export restrictions from other countries, and the skills gap among American workers.

Earlier this week, Nvidia announced its commitment to manufacture artificial intelligence (AI) supercomputers exclusively in the United States, aligning with the recent push for domestic production spurred by tariffs introduced during the Trump administration.

Nvidia has commenced production of its Blackwell chips at the Phoenix facility of Taiwan Semiconductor Manufacturing Company (TSMC) and is also establishing supercomputer manufacturing sites in Texas, collaborating with Foxconn in Houston and Wistron in Dallas. Mass production at these facilities is anticipated to increase significantly over the next 12 to 15 months.

Pharmaceuticals: A Specific Concern for Indian Firms

While the Indian pharmaceuticals sector may have celebrated its exclusion from Trump’s reciprocal tariffs on April 2, the new national security investigation into the industry raises concerns about potential additional tariffs on imports.

This issue is particularly troubling for Indian pharmaceutical manufacturers. From April to December of FY25, Indian drug and pharmaceutical exports approached $22 billion, with the United States representing nearly one-third of these shipments.

The extensive national security investigation by the United States will encompass both finished generic and non-generic drug products, medical countermeasures, essential inputs such as active pharmaceutical ingredients and key starting materials, as well as derivative products related to these items.

The White House stated that the United States remains heavily dependent on foreign sources, particularly adversarial nations, for these essential materials, exposing the economy and defense sector to supply chain disruptions and economic coercion.

Foreign producers have engaged in price manipulation, overcapacity, and arbitrary export restrictions, using their supply chain dominance as a tool for geopolitical and economic leverage over the United States.

"Critical minerals: Target China, the world leader in sector" is the obvious goal of the national security probe into critical minerals, which Trump ordered on Tuesday. The investigation will evaluate supply chain vulnerabilities, the economic impact of foreign market distortions, and potential trade remedies for domestic supply of these essential materials.