The U.S. government disclosed on Monday that it has launched an investigation into the impact of imported drugs and semiconductors on national security. This is widely seen as a prelude to imposing tariffs on prescription drugs and semiconductors, and may further escalate the trade war launched by the United States.

The U.S. Department of Commerce said in two notices that it has begun investigating the impact of imports of "semiconductor and semiconductor manufacturing equipment" and "drugs and drug ingredients, including finished drugs" on U.S. national security.

These investigations (called the "Section 232 Survey") began on April 1, the day before U.S. President Trump announced "reciprocal tariffs" (specially exempting drugs) on all imported goods.

"232 Investigation" refers to the US Department of Commerce's authorization under Section 232 of the Trade Expansion Act of 1962 to investigate whether imports of specific products pose a threat to U.S. national security. The investigation allows the U.S. president to restrict imports of products deemed to pose a threat to national security.

According to the law, the Commerce Secretary should submit the findings within 270 days, but U.S. President Trump and other officials have said the work may end soon.

drug

The investigation into drugs will cover all drug imports, including finished generic and original drugs, as well as ingredients used to produce these drugs. Investigators will also review the import of key medicinal ingredients.

The investigation will examine specific issues, including the current and projected demand for pharmaceuticals and pharmaceutical ingredients in the United States; the role of foreign supply chains, especially the supply chains of major exporters in meeting U.S. drug demand; import concentrations on a few suppliers and their associated risks; and the feasibility of increasing domestic drug and raw materials capacity.

Trump said last week that he would impose "high tariffs" on prescription drug imports in the coming weeks. He believes that the United States is a huge market, and the price of paying drugs is often many times higher than that of countries with drug production. Imposing tariffs on drugs can prompt pharmaceutical companies to open factories in the United States.

Trump's threat of imposing tariffs on drugs has made the drug industry nervous. Experts warn that the plan could disrupt global supply chains. In addition to the price increase caused by tariffs, they are also worried that generic drug manufacturers will withdraw from the market, which will exacerbate existing drug shortages.

semiconductor

The U.S. Department of Commerce has a wide range of investigations into semiconductors and will evaluate the import of traditional and cutting-edge chips. According to a government announcement, the investigation will cover all imports of semiconductors, as well as equipment used to manufacture them, and also electronic products containing these components.

The U.S. Customs and Border Protection Agency (CBP) issued an updated tax rule last Friday, exempting import tax rates for categories of goods including automatic data processors, computers, communication equipment, monitors and modules, semiconductor-related products, and are not affected by "peer-to-peer tariffs."

However, Trump posted on social media last Sunday that the U.S. government has not announced any "exemption" of tariffs, and related products have only been transferred to another tariff category.

Trump believes that imposing tariffs on electronic chips will force companies to move factories to the United States .

U.S. Commerce Secretary Lutnik also said last Sunday that although smartphones, computers and other electronic products are not subject to "reciprocal tariffs", they will be covered by semiconductor tariffs, which may be issued in one or two months.

232 Surveys are often used by the United States as a tool to implement trade protectionism, imposing tariffs on imported products on the grounds of "national security". In March this year, Trump also launched a 232 investigation into the copper and wood industry. He has used 232 investigations to impose tariffs on imported steel, aluminum and cars.

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