Trump Trade War: New Tariffs on Drugs, Trucks, and Furniture Raise Inflation Risks

President Donald Trump has reignited trade tensions with sweeping new tariffs, targeting industries from pharmaceuticals to trucks and furniture. The measures aim to bolster U.S. manufacturing and national security, but they risk higher costs, weaker sentiment, and a renewed strain on global supply chains.

Trump Trade War: New Tariffs Spark Fresh Uncertainty

President Donald Trump imposed new import tariffs, reigniting trade tensions after a period of calm. The measures include 100% duties on patented drugs and a 25% levy on heavy-duty trucks, effective this week. Trump framed the move as a step to protect U.S. manufacturing and national security. However, the decision also presents challenges for businesses, including managing supply chain issues, higher costs, and softer consumer confidence.

The chart below shows that five-year inflation expectations in the United States rose to 3.7% in September, revised down from the initial estimate of 3.9%. However, it remains above August’s 3.5%.

Moreover, the University of Michigan consumer sentiment index for the U.S. dropped to 55.1 in September 2025, down from 58.2 in August. This marks the second consecutive monthly decline, pushing sentiment to its lowest level since May.

Moreover, Trump’s new duties also target everyday goods. Imported kitchen cabinets and bathroom vanities face 50% tariffs, while upholstered furniture faces a 30% levy. These measures increase costs for a core consumer sector and risk further inflation.

The Federal Reserve has already warned that tariffs are contributing to higher U.S. consumer prices. These higher input costs could ripple across industries, from housing to retail, at a time when many households are already under pressure.

Shifting Trade Deals and Rising Risks

Trump’s administration signed trade deals this summer with Japan, the EU, and South Korea to ease some tariffs. However, the latest measures raise doubts about the extent of protection those agreements provide. The White House says it will honor 15% caps on tariffs for patented drugs from countries with specific deals, but South Korea has no such provision for cars. This leaves its auto exports exposed to a 27.5% total US tariff.

Moreover, Britain reached its first trade deal with Trump in May, which included a 10% base tariff rate, but did not specify drug duties. Branded drugs from Britain now face the full 100% duty. U.K. officials are seeking concessions, including higher payments to the National Health Service, to ease the impact. Without clear documentation, trading partners face uncertainty about which products will be most affected and which may be exempt. This unpredictability complicates supply planning for global companies.

Winners and Losers from Trump’s New Tariffs

The new tariffs create a mixed landscape for businesses and investors. U.S.-based heavy-duty truck makers, such as Paccar Inc. (PCAR) and Freightliner, could gain from reduced foreign competition. On the other hand, shares of German truck makers Daimler Truck and Traton dropped as the levies eroded their U.S. competitiveness.

Moreover, pharmaceuticals show a similar divide. Drugmakers without U.S. plants face steep duties, while companies like Roche Holding and Novartis (NVS), which have invested in U.S. production, gain a partial shield.

Meanwhile, furniture imports, which account for 60% of imports from Vietnam and China, will face sharp cost increases. This will potentially boost domestic producers like La-Z-Boy and Ethan Allen, but put pressure on retailers that rely on imports.

The stock markets initially shrugged off the news. U.S. and European pharmaceutical stocks held steady, while U.S. equities traded flat amid mixed economic data. However, rising tariffs could lead to inflationary pressures and weigh on global growth if the measures persist. For now, investors may keep calm and carry on, but prolonged trade friction could eventually shift sentiment.