President Trump announced on April 2 two significant tariff changes under Section 232 of the Trade Expansion Act of 1962. One restructures tariffs on imported aluminum, steel, and copper, lowering some rates while adding new carve-outs and sourcing rules. The other raises tariffs to up to 100 percent on patented pharmaceutical imports.
TPC finds that these changes significantly reduce tariffs on steel and aluminum, with the average rate falling by over 20 percentage points. They would increase the average tariff rate on pharmaceuticals by 5 percentage points. Overall, the average tariff rate is now about 10 percent.
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The headline rates matter, but the fine print matters more: These tariffs do not just raise or lower costs. They create unusually specific carve-outs for certain industries and firms.
Simplifies metal treatment but raises harder questions
The new metal tariffs aim to simplify a messy system. Under the old rules, some metal derivatives were taxed (50 percent tariff on steel and aluminum) as if they were pure metal, some were exempt when they used US-poured steel, and others were taxed only on the value of their metal content.
That structure created practical problems, especially for products in the “value of metal content” group: How could an importer determine the value of the metals in their product if they didn't source the metal themselves?
It was also inconsistent in its structure: If products in the “pure metal” and “value of their metal content” groups used US-poured steel, why were they denied the same exemption as products in the second group?
The new tariffs on steel, aluminum, and copper sort derivative products into different rate buckets, with additional exceptions and reduced-rate treatment tied to US-sourcing requirements: those subject to the 50 percent tariff, those subject to the 25 percent tariff, and those eligible for temporary 10 percent tariffs. TPC has published a detailed list of all changes.
Special treatment for derivatives with US-poured steel now applies to all derivatives. But this creates a new problem for most metal importers: If they want a lower tariff, they have to determine the share of US metals their product uses. An importer would need unusually detailed supply-chain data showing not just what inputs a foreign producer used, but where those inputs originally came from. Public data do not go that far—which is why TPC cannot model these special provisions.
Exempts certain parts, if used in motorcycles
Buried in the new provisions is an exemption for certain motorcycle parts that would otherwise face the 25 percent tariff. The carve-out depends on end use in motorcycle manufacturing, not on whether a part is uniquely a motorcycle part.
This lowers the relative cost of producing motorcycles compared to other manufactured goods that use similar metal inputs. That means a motorcycle and a car that sell for the same price would not be treated equally—the motorcycle producer gets more room to absorb higher costs because some metal inputs are exempt from tariffs.
The obvious question: Why motorcycles? The carve-out suggests a more tolerant approach to import dependence in motorcycle production than in some other sectors.
Exempts patented drug imports, if a firm makes two deals
The standard rate on a patented pharmaceutical is 100 percent, but imports from trading partners like the United Kingdom and the European Union face preferential statutory rates.
These tariffs also operate at the company level. A firm’s covered imports are exempt from the patented pharmaceuticals tariff if it signs two agreements. The first is a "most-favored nation" (MFN) drug pricing deal. This typically involves selling products on TrumpRx, a new federal online portal that operates as a coupon aggregator for self-pay patients to purchase, as of now, any of 69 listed drugs.
The second is an onshoring deal to move production to the US. If a firm signs only an onshoring deal, its tariff is 20 percent. The tariff provision explicitly names 17 drug companies that signed deals, though it doesn't specify the type of deal. Of these, 16 appear to have signed both types.
This is an unusual, firm-specific form of tariff design. Rather than turning on product and country alone, tariff treatment appears tied to voluntary agreements between specific firms and the sitting administration. The special treatment for MFN signatories expires on January 20, 2029.
Generic drugs are entirely exempt from these tariffs. But that creates another wrinkle: As drugmakers internalize tariff costs, the exemption could tilt incentives at the margin toward generics and away from some patented drugs.
New Section 232 tariffs still pick winners
Whenever this administration has lowered tariffs, it has targeted those efforts while maintaining the broader regime. It has lowered costs for some imports, and doing so has also lowered prices for some consumers.
Targeting is not the only option. Across-the-board reductions would provide relief more evenly, without the same degree of product- and firm-specific benefits. But tariffs raise other issues, such as distorting consumer choices between domestic and foreign goods.
A consumption tax that applies equally to domestic and imported goods would raise revenue while minimizing influence over a buyer's choice of goods. That's a bigger policy conversation. But if tariff policy is becoming a tool for country-by-country, product-by-product, and even firm-by-firm favoritism, it's one worth having.
