CNBC's Martin Soong and Chery Kang talked about Trump's latest threat to impose new tariffs on copper, chips and pharmaceuticals on Squawk Box Asia and discussed who'll end up footing the bill.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

CNBC's Martin Soong and Chery Kang examined the potential economic impact of new U.S. tariffs on copper, semiconductors, and pharmaceuticals. The discussion highlighted that the U.S. government could raise up to $400 billion annually from these tariffs, but the costs are likely to be passed on to either consumers through higher prices or companies through lower earnings.

The analysts noted that pharmaceutical companies exporting to the U.S. may try to shield themselves from tariff liabilities through contracts, but the overall uncertainty could affect both U.S. and foreign businesses. The tariffs are expected to have significant implications for company earnings and could influence market performance, with the burden ultimately shared between consumers and companies.

Trump broadens trade war: who will pay for it?

I mean, the issue is somebody's got to pay for all this. I want to play a soundbite from Thorsten Slack over at Apollo, whom we talked to yesterday. Then we'll continue talking. Take a listen. So far, the U.S. government is raising about $30 billion every month. So at an annualized rate. So the question is, who is it that's going to pay $400 billion? Is it consumers in the form of higher prices, or is it companies in the form of lower earnings? There is no free lunch. Someone needs to pay the higher tax revenue that's being collected. And this is where things become very important for markets, namely, it is likely that this will begin to show up in earnings for the S&P 500. You know, Sherry Kang, it sounds as though there's no easy way out of this, right? We've got earnings season just around the corner. So we'll have to listen out for what companies have to say, whether they've got pricing power or not, whether they have to eat it on the margin. But either way, right, it's either consumers eat it or companies eat it. And either way, it's not going to be good for the economy, I don't think. Yeah. When it comes to pharma, right, he's warning 200 percent tariffs. Is that high enough to force these pharma companies to onshore to the United States? Or because we're getting that 18 months of a transition period, do pharma companies think that that's enough time to move their production capacities? I was actually reading about some of these South Korean pharmaceutical companies that actually export to the United States, examples such as Taeyong Pharmaceutical or Hugel. And they're mostly exporting botulinum toxin products, so basically Botox. And reports suggest that their contracts with U.S. buyers reportedly cover tariff liabilities. So I think it's really about how you navigate tariff uncertainty. Do you sort of shield yourself from tariff liabilities with your own individual contracts? Or do Trump's tariffs override all that? And I think that is something that we need to think about if you're running businesses like this. Yeah, I would agree with you totally, right? So just to do a little bit of math here, right? On the high end, and this is Torsten Slott, right, he reckons that the U.S. is going to raise about $400 billion this year from tariffs, right? We had, who was it, Adam Posner from PIIE, he's a little bit more modest. I think he's looking for maybe $350 or $300 billion. But either way, you know, as a percentage, as a fraction of total U.S. earnings, it works out to roughly up to 20%. So I mean, my worry is, and we watch markets every day, right, Sherry? If companies are the ones that are going to have to eat it, we're looking at a pretty big drawdown for the market ahead. Yeah, so I didn't really make my point clear. So I think that's where U.S. companies might actually lose out in all this. Sure, it could lead to a weaker dollar. And you know, if it makes the Trump administration happier, fine. But companies will have to decide where do, I mean, that $100 billion, that big number that we're talking about, where does it come from, like Torsten was asking. And I think it will have to be somehow divided up by between consumers in the United States and companies in the United States. In the meantime, some of these suppliers outside of the U.S. will have to find some other alternatives, which is already happening if you look at some of the data points. So I think that is something that we need to think about as well.

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Trump broadens trade war: who will pay for it?

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