Trump Administration Trade Actions Risk Tariff and Other Disruptions for Multiple Sectors and Trade Partners

On Monday, January 27, 2025, in a speech to congressional Republicans, President Trump announced his intent to impose tariffs on pharmaceuticals and semiconductors “in the near future,” with a stated goal of increasing the domestic manufacture of these goods. He also alluded to new tariffs on steel, aluminum, and copper, underscoring the value of these materials for military use, and repeatedly threatened to impose tariffs on Mexico and Canada by February 1, 2025. These comments came on the heels of the Trump administration’s January 20, 2025 memorandum unveiling its new “America First Trade Policy” (Trade Policy Memorandum). The Trade Policy Memorandum addresses “unfair and unbalanced trade,” trade relations with China, and economic security matters. As President Trump’s tariff plans take shape, life sciences, technology, and other companies relying on imported goods in sensitive industries or from targeted countries should anticipate potentially disruptive tariff actions and other trade policy changes.

Instead of imposing tariffs immediately, the Trade Policy Memorandum sets the stage for a wide range of potential trade and tariff actions, including tariff actions aimed at protecting particular industries, as well as actions intended to address trade deficits or alleged unfair practices by other countries. The memorandum requests reports from various agencies, which likely will be used to establish factual support for various trade actions. Anticipated trade actions include: (1) significant tariffs on trading partners, including Mexico and Canada; (2) expansion of existing tariffs on China, including higher tariffs and the expansion of tariffs to include goods that are currently not subject to duties; (3) changes to U.S. federal procurement rules, which could impact pharmaceuticals and other products sourced from allies, including the European Union, Japan, Korea, Canada, and the United Kingdom; and (4) new tariffs on essential industries, such as semiconductors and pharmaceuticals, similar to the steel and aluminum tariffs imposed in the first Trump administration. While tariff actions against Mexico, Canada, and China could be coming sooner, sector-specific tariffs and other longer-term actions may be rolled out in coming months.

President Trump’s January 27 comments and certain provisions in the Trade Policy Memorandum indicate that the administration is considering relying on Section 232 of the Trade Expansion Act of 1962 to target key sectors for tariff protection. Section 232 allows the president to take action to adjust imports if he finds that such imports threaten to impair U.S. national security. In his first term, President Trump relied on Section 232 to impose tariffs on global imports of steel and aluminum, which remain in place today. The Trump administration also could rely on Section 232 to target semiconductors, finished drug products, and imports of active pharmaceutical ingredients, which would be consistent with the administration’s objective to expand U.S. manufacturing and supply chain resilience in those industries. The Trump administration has also repeatedly mentioned the possibility of relying on the International Emergency Economic Powers Act of 1977 (IEEPA), as well as other executive authorities to impose tariffs. IEEPA gives presidents broad powers to impose trade and sanctions measures, including regulation of imports, if they declare a national emergency.

The anticipated tariff actions come against a backdrop of increased trade compliance enforcement over the past decade by U.S. Customs and Border Protection, as well as the U.S. Department of Justice. In particular, the last decade has seen an upswing in False Claims Act cases, investigations, and settlements based on alleged customs violations. As a result, the Trump administration’s recent trade announcements might not only increase supply chain costs for life sciences and other industries, but also are likely to encourage greater government scrutiny of potential customs-related compliance violations.

Please contact the authors of this post or any of their colleagues in Arnold & Porter’s International Trade practice group for further information about these tariffs or trade compliance more generally.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.