When industries can boost profits more easily by lobbying for tariff exemptions than by competing in the marketplace, they will—and those incentives grow stronger as government intervention in the economy increases.
On April 2, President Donald Trump announced a baseline 10 percent ad valorem tariff on all countries. These purportedly reciprocal tariffs, which were implemented on top of the country- and goods-specific duties already in place, were calculated by referencing trade deficits—not foreign tariffs—on American exports.
Tariffs harm consumers and hamstring domestic producers by increasing the price of imported inputs, forcing domestic firms to increase the price of final goods. Importers often direct capital, labor, and time to achieve exemptions from tariffs to decrease their operating costs, no matter who is in power.
Annex II of the president's executive order on reciprocal tariffs shows which industries were most successful in lobbying for a carve-out.
Cars
In Proclamation 10908, Trump imposed a 25 percent tariff on foreign automobiles and parts with the intention of increasing the domestic market share of American vehicle manufacturers. Annex II exempts "all automobiles and automotive parts subject to the additional duties imposed pursuant to….Proclamation 10908." The American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, raised over $3 million in 2023 and spent hundreds of thousands of dollars lobbying in 2024.
Pharmaceuticals
Annex II explicitly lists pharmaceuticals as one of the products not subjected to reciprocal tariffs. PhRMA, an American trade association representing Pfizer, Novartis, Johnson & Johnson, and many other biotech companies, spent over $387 million on lobbying in 2024 alone.
Energy
Energy and energy products are also exempted from the "reciprocal" tariffs. The American Petroleum Institute, which represents Exxon Mobil Corp., Chevron, and ConocoPhillips, among others, has spent over $127 million since 1998 on lobbying efforts, including over $4 million in 2022 alone.
Semiconductors
The Semiconductor Industry Association warned the Trump administration in February that "tariffs could make it significantly more expensive to develop and produce Made-in-America semiconductors [and] artificial intelligence." The association instead advocates "sectoral trade negotiations and tax incentives" to expand domestic manufacturing. Annex II excludes semiconductors themselves, as well as "critical minerals" such as high-purity silicon and copper required for their manufacture, from Trump's tariffs. The association spent over $1.6 million on lobbying efforts in 2024.
The post These 4 Industries Successfully Lobbied Trump for Tariff Exemptions appeared first on Reason.com.
