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Trump’s Latest Tariffs Raise More Questions. Investors Need to Stay Alert.

Sep 26, 2025 17:50:00 -0400 by Reshma Kapadia | #Trade

Truck manufacturers are among the targets in the most recent round of tariffs. The effect on the industry remains somewhat unclear. (PATRICK T. FALLON/AFP via Getty Images)

Key Points

President Donald Trump’s latest tariff threats —on pharmaceuticals, furniture, and foreign-made heavy trucks—is the latest counter to recent complacency about tariffs and a reminder that more are coming.

Trump said late Thursday that the U.S. would put 100% tariffs on “branded or patented” pharmaceutical products unless a company is building manufacturing plants in the U.S.; 25% tariffs on heavy trucks; 50% tariffs on kitchen cabinets and bathroom vanities; and 25% tariffs on upholstered furniture. They are all set to go into effect on Oct. 1.

Further details weren’t available, including what would be excluded in light of other trade pacts that have already been struck, and whether these tariffs would be in place of or in addition to existing levies. The White House didn’t immediately respond to a request for comment.

The lack of details make it difficult to assess how much more U.S. consumers might end up paying for shipping costs, home remodels, and medicines, especially as a spate of exemptions could limit the near-term impact. But the uncertainty provides more fodder for those who concur with Federal Reserve Chair Jerome Powell’s warning that the effects of tariffs on inflation will show up gradually.

The latest tariffs reinforce the administration’s desire to keep tariffs in the mix and preserve the revenue even if the Supreme Court sides with lower courts and finds that Trump’s sweeping country-specific tariffs are illegal. The Supreme Court will hear the administration’s appeal on Nov. 5, with a decision possible by year end.

“This is Plan B,” says Henrietta Treyz, head of economic policy research at Veda Partners, who puts odds currently at 65% that the high court will rule against the administration but also cautions investors that tariffs are not a one-off event.

The tariff revenue the U.S. is collecting offers a small offset to the rising U.S. deficit, acting as a salve for concerned investors. On Thursday, Trump said he would tap some of that revenue to ease the tariff hit to U.S. farmers. With Trump now not expected to visit China until early next year, it appears less likely that there will be a deal in which Beijing would agree to buy some U.S. farm goods.

Treyz expects farmers to get possibly about $35 billion worth of assistance—roughly what they received in Trump’s first term—through the USDA’s Commodities Credit Corporation, aid that would work somewhat like TARP did for banks during the financial crisis.

The impact of the latest pharmaceutical tariffs could be limited. Dan McCarthy, former senior staff member at the U.S. Trade Representative’s office who now advises small- to midsize businesses as a principal at McCarthy Consulting, sees tariffs as leverage to pressure companies to build in the U.S. to get a lower tariff rate or exemption.

Still unclear, though, is how low the bar will be to demonstrate a commitment to building plants in order to gain the exemption. Also unclear is the role of existing trade pacts, as the deal with the European Union should protect European firms from these tariffs.

Oxford Economics Head of European Macro Ángel Talavera in a note to clients said the trade uncertainty poses a strong headwind for corporate investment in coming quarters. But the market’s reaction was relatively subdued given that Roche, AstraZeneca, and others have already announced investment commitments that could spare them.

Similar confusion persists in other sectors. While the U.S. hasn’t yet unveiled its investigations into lumber and timber, Trump unveiled tariffs on furniture—a derivative product. “A big question is where tariffs land on lumber and timber given how widespread their use is for construction and housing and domestically-produced furniture and the overall concerns about inflation and housing costs,” McCarthy says.

For the duties on foreign-made heavy trucks, analysts were looking for clarity on whether the content that complies with the U.S.-Mexico-Canada trade agreement will be exempted as it was in the sectoral auto tariffs. If so, the exemption would minimize the hit, as much of the truck manufacturing and trade is within the Americas.

Tariffs and trade uncertainty could feed into higher shipping costs, as truckers are already struggling with constrained labor in the wake of a crackdown on illegal immigration, Treyz says. On Friday, shares of U.S. heavy-duty truck maker Paccar rose 5% to $100.41 while Germany’s Daimler Truck shares fell almost 2% to 35.89 euros.

Consultants are telling their clients that tariffs still loom large, with more announcements expected on levies related to critical minerals—which could ripple through to energy and industrials—and semiconductors. The administration has also launched new probes into industrials, robotics, and makers of surgical instruments and other medical devices that could result in tariffs that put pressure on Asian countries such as China, Vietnam, and Malaysia.

Even if certain products aren’t hit with tariffs in the first round, analysts caution that the administration has been expanding the list of goods targeted—an approach that differs from those of past administrations, including Trump’s first.

“They have an inclusion process so companies can go to the Commerce Dept. and suggest the U.S. put a tariff on a product that could be a competitor’s,” McCarthy said. “Companies could have to get ready for a two-step process where they are applying for a refund if the Supreme Court strikes down the IEEPA tariffs but also a new round of tariffs.”

Write to Reshma Kapadia at reshma.kapadia@barrons.com