So, first of all, I’m making this comment assuming that these tariffs are going to actually be imposed, then stick and not be quickly yanked. My guess is that they’re probably going to stick.

A tariff is a tax on consumers that benefits otherwise-uncompetitive domestic producers.

There are three items here.

For semiconductors, there’s been a – plausible, to me – argument that having domestic chip fabrication has national security implications. The US doesn’t presently do a lot of modern chip fabrication, and if you figure that AI and some other important things may be constrained by access to chips, or that physical access to chips might be security-critical, that may be a strategic good.

It has a downside in that it will make chips and the products they contain cost more for American citizens. But I don’t think that the idea that having domestic chip fabs is advantageous is all that strange. Under the Biden administration, we had legislation also passed, the CHIPS and Science Act, which subsidized domestic chip fabrication. Does basically the same thing, same rationale, just that with the Biden approach, the taxpayer pays and the government doles out money and under the Trump approach of using tariffs, the entities specifically using the chips pays a tax on those chips, and domestic manufacturers basically get a benefit relative to foreign competition.

The idea is that there’s a positive externality to having chip manufacture be domestic. I have no idea whether 25% is a reasonable tariff, but the idea of a tariff isn’t intrinsically unreasonable, I think.

For autos, I think that this is mostly domestic politicking. There are important swing states that manufacture automobiles, and transferring money from Americans purchasing autos to auto manufacturers has been a theme; in Trump’s first term, that was one area that he established a higher domestic parts requirement for within NAFTA->USMCA.

I guess that it’s theoretically possible that there’s a national security benefit – I mean, in World War II, American ability to domestically manufacture automobiles at scale was quite important – but I kind of doubt that we’re going to see that kind of sustained conflict. And I’m skeptical that we’re really at massive risk if we don’t produce autos domestically. I also think that it’s probably possible to have them manufactured in friendly countries.

So I think that that’s most-likely economically-inefficient. Americans who buy autos will unnecessarily pay a tax, which will benefit domestic automakers. Part of domestic politicking, and a result of the fact that Presidential elections favor swing states, and currently, swing states do auto manufacture. Call it an inefficiency baked into the way our political system works.

I don’t know the story about pharmaceutical manufacture. I mean, COVID-19 did highlight that it could be important, in a global pandemic, to have domestic or at minimum friendly supply chains of certain medical goods, but I think that the US did pretty well already on vaccines.

kagis

It looks like Elizabeth Warren, a prominent progressive Democratic senator, recently sponsored a bill aiming to benefit domestic pharmaceutical manufacture, with a public justification of national security:

https://www.warren.senate.gov/newsroom/press-releases/warren-smith-renew-fight-to-strengthen-us-pharmaceutical-manufacturing-capacity-and-end-over-reliance-on-foreign-countries-for-life-saving-drugs

The Pharmaceutical Supply Chain Defense and Enhancement Act would:

• Require the Food and Drug Administration (FDA) and Defense Department to develop a confidential list of “critical drugs” essential for public health and national security.

It also says that she worked with Marco Rubio (Republican, and now a cabinet member in the Trump administration) on related material:

In October 2024, Senators Elizabeth Warren and Marco Rubio (R-Fla.) reintroduced the United States Pharmaceutical Supply Chain Review Act, legislation to require the Federal Trade Commission, in consultation with the Department of Commerce, to produce a report on the impacts of foreign investment in the United States’ pharmaceutical industry.

So I’m guessing that it may be that there’s some level of bipartisan support for protectionist policy for pharmaceutical manufacture on national security grounds.

https://www.bls.gov/mxp/publications/regional-publications/charts/top-6-pharmaceutical.htm

It looks like the top place in the US to do pharma manufacture is Puerto Rico, which I’d guess has something to do with its special tax and regulatory status.

kagis

Yes:

https://en.wikipedia.org/wiki/Pharmaceutical_industry_in_Puerto_Rico

The pharmaceutical industry in Puerto Rico encompasses more than half of all manufacturing done in Puerto Rico. As the island’s most prominent industry, pharmaceutics generates more than 18,000 jobs, pays more than US$3 billion in taxes, comprises about half of total exports, and has generated more than 25% of the island’s GDP for the past four decades.

Pharmaceutical companies originally came to Puerto Rico in the late 1960s and 1970s to take advantage of the now-expired federal tax incentive known as Section 936. This incentive allowed U.S.-based manufacturers to send all profits from local plants to stateside parent plants without having to pay any federal taxes.

So my guess is that this one probably isn’t just domestic politicking; Puerto Rico isn’t politically-critical.

I have not read up on the material, and one could certainly go looking further, but I suppose that a pharmaceutical tariff could be reasonable, if we’re worried about access to medicines in a second COVID-19-style situation. At minimum, I doubt that support for such a tariff is something specific to the Trump administration.

Are there downsides? Sure. It’ll make medication more expensive for Americans. It’ll make cars more expensive for Americans. It’ll make electronics (and things made with electronics) more expensive for Americans. The real question is whether any benefits to having domestic sources are worth that additional expense, for each item.

My own guess is that there’s probably an argument for some level of tariff for chips, albeit maybe not 25% – which is a questionably nice, round number – probably not a very good justification for cars, and possibly some level of justification for pharmaceuticals, this last item based entirely on what I quoted above, as I’ve no prior familiarity with the situation.