Trump-era tariffs may persist in significant industries predicts JPMorgan
In a significant development, the report suggests that the US may not revert to an era of low tariffs and comprehensive free trade agreements in the near future. This shift is particularly noticeable in strategic sectors such as semiconductors and defense.
The Trump administration has proposed heavy tariffs on semiconductor imports, with rates reaching up to 100%, and other high duties under Section 232 investigations citing national security reasons. This move is aimed at boosting domestic manufacturing and securing supply chains amid geopolitical tensions.
President Trump announced intentions to impose approximately 100% tariffs on semiconductor imports and up to 250% tariffs on pharmaceuticals. Critical sectors like copper, heavily used in semiconductors, are also facing increased tariffs at 50%. These tariff hikes are part of a broader strategic push to rebalance supply chains domestically and reduce reliance on foreign suppliers.
The outlook for these sectors indicates a continuation or intensification of tariffs. The administration views tariffs as tools to protect U.S. national security and stimulate domestic industrial investment. Companies like Apple, Nvidia, and TSMC are responding by significantly increasing U.S. investments in manufacturing and R&D.
The overall tariff environment in 2025 has seen the U.S. effective average tariff rate rise to about 20.6%, the highest since 1910. Tariff increases on metals and minerals critical to defense and semiconductor supply chains, such as copper, create additional cost pressures and regulatory barriers.
This suggests that tariffs will remain a key element of U.S. strategic trade policy, particularly for semiconductors, defense-related materials, pharmaceuticals, and critical minerals. The trend aligns with a toughening tariff stance that prioritizes supply chain security and domestic industry resilience amid rising global geopolitical tensions.
Companies may adjust their investments to reflect the current trade landscape, potentially reducing the likelihood of returning to the previous trade regime. JPMorgan launched the Center for Geopolitics in May to help businesses navigate global instability and economic challenges.
However, recent trade deals have raised hopes of a softened White House stance, but the report warns against expecting a return to pre-Trump policies. Market optimism about tariffs being a political bargaining tool may be misplaced. The rollback of tariffs is unlikely after President Donald Trump’s term.
A report by the JPMorganChase Institute estimated that the implementation of full universal tariffs announced in April could cost midsize companies up to US$187.7 billion in direct import costs by 2025, more than six times the cost of earlier tariffs at the start of 2025.
For a more detailed outlook or forecasts from the JPMorgan Geopolitics Center, it is recommended to consult their latest reports directly. Derek Chollet, with experience in the Pentagon, State Department, White House, and Congress, is leading the JPMorgan Center for Geopolitics.
| Sector | Current Tariff Action | Outlook/Impact | |-----------------|--------------------------------------------|--------------------------------------------------------| | Semiconductors | ~100% proposed tariffs on imports | Heavy tariffs likely to continue; stimulates U.S. investment and reshapes supply chains | | Defense | Section 232 investigations on critical materials; tariffs on copper and others | Heightened tariffs protect national security supply chains; raises input costs | | Critical minerals| Tariffs on copper imports at 50% | Increased costs ripple through supply chains, incentivize domestic sourcing | | Overall U.S. tariffs | Average effective tariff ~20.6% | Highest in decades; tariffs influence prices and industrial strategies broadly |
This sustained or even escalated tariff environment in these strategic sectors aims to secure U.S. industrial and defense competitiveness.
- The proposed tariffs on semiconductor imports, reaching up to 100%, indicate a continuous or intensified tariff strategy in the semiconductor sector, with the goal of stimulating U.S. investment and reshaping supply chains.
- Section 232 investigations on critical materials for defense, such as the implementation of tariffs on copper, aim to protect national security supply chains, consequently raising input costs for these sectors.
- The increase in tariffs on critical minerals like copper, essential for semiconductor production, creates additional pressure on input costs, thereby encouraging domestic sourcing and aligning with the broader strategic push for supply chain security.
