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What are tariffs, how do they work and why is Trump using them? What are tariffs, how do they work and why is Trump using them?
(about 4 hours later)
Watch: What is a tariff? The BBC's Adam Fleming explainsWatch: What is a tariff? The BBC's Adam Fleming explains
US President Donald Trump has paused his latest round of higher tariffs against some of America's trading partners. US President Donald Trump has placed 125% tariffs on goods imported from China, leading Beijing to respond with an 84% tax on American products.
Taxes on goods imported from 60 countries he had described as the "worst offenders" took effect on 9 April. Trump had also brought high tariffs on dozens of other countries but these have been suspended for 90 days.
But Trump later said those higher rates for some countries would be paused for 90 days, with a blanket 10% tariff to apply in the meantime. He argues that tariffs will boost US manufacturing and protect jobs, but the world economy has been thrown into chaos and prices are expected to rise for consumers.
At the same time he hiked tariffs on Chinese products to 125%.
Trump has said tariffs will boost US manufacturing and protect jobs, but economists warn that the move could harm the world economy and push up prices for consumers in the US and around the globe.
What are tariffs and how do they work?What are tariffs and how do they work?
Tariffs are taxes charged on goods bought from other countries.Tariffs are taxes charged on goods bought from other countries.
Typically, they are a percentage of a product's value. For example, a 25% tariff on a $10 (£7.59) product would mean an additional $2.50 (£1.90) charge. Typically, they are a percentage of a product's value. The 125% tariff on Chinese goods means that a $10 product would attract a $12.50 tax on top - raising the total cost to $22.50.
The 125% tariff on Chinese goods means that a $10 product would attract a $12.50 tax on top - driving the total cost up to $22.50.
The companies that bring the foreign goods into the country have to pay the tax to the government.The companies that bring the foreign goods into the country have to pay the tax to the government.
The money is collected when the imported goods clear US customs.The money is collected when the imported goods clear US customs.
Firms can choose to pass on some or all of the increased cost to customers.Firms can choose to pass on some or all of the increased cost to customers.
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Why is Trump using tariffs?Why is Trump using tariffs?
For decades, Trump has argued the US should use tariffs to boost its economy.For decades, Trump has argued the US should use tariffs to boost its economy.
He says they will encourage US consumers to buy more American-made goods, increase the amount of tax raised and lead to huge levels of investment in the country.He says they will encourage US consumers to buy more American-made goods, increase the amount of tax raised and lead to huge levels of investment in the country.
Trump wants to reduce the gap between the value of goods the US buys from other countries and the value of those it sells to them. He argues that America has been taken advantage of by "cheaters" and "pillaged" by foreigners.Trump wants to reduce the gap between the value of goods the US buys from other countries and the value of those it sells to them. He argues that America has been taken advantage of by "cheaters" and "pillaged" by foreigners.
The US president has also made other demands alongside tariffs. The first wave announced during his current term targeted China, Mexico and Canada, after he said he wanted them to do more to stop migrants and illegal drugs reaching the US. The US president has also made other demands alongside tariffs. The first announced during his current term targeted China, Mexico and Canada, after he said he wanted them to do more to stop migrants and illegal drugs reaching the US.
Trump has strongly defended his tariff policy but a growing number of influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures. Trump has strongly defended his tariff policy but influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.
The argument has even split the White House team, with tariff policy sparking a recent personal spat between Elon Musk and Trump's trade adviser Peter Navarro. Trump steps back: Retreat or negotiating strategy?
Why this is the biggest change to global trade in 100 years 'Sometimes you have to take medicine': Trump defends sweeping tariffs
Trump's tariffs are a longtime goal fulfilled - and his biggest gamble yet What has Trump announced on tariffs?
Who are the tariff 'PANICANS' derided as 'weak and stupid' by Trump? Since Trump's inauguration in January there has been a flurry of announcements on tariffs, with other countries scrambling to respond.
Trump's tariffs are expected to significantly disrupt US car production and put up prices 1 February: The president announces a 25% levy on Canadian and Mexican exports to the US - and an additional 10% on China
What are Trump's 'reciprocal tariffs'? 3 February: Mexico and Canada reach a deal to pause US tariffs for one month
Trump introduced a minimum 10% tariff on all imports to the US on 5 April. 10 February: Trump announces a 25% import tax on all steel and aluminium entering the US
The UK, Argentina, Australia, Brazil and Saudi Arabia are among the countries whose goods face this "baseline" charge. 4 March: The White House increases the tariff on Chinese imports to 20%
Much higher tariffs were initially introduced against 60 other countries on 9 April. 5 March: Trump temporarily exempts carmakers from the 25% tax imposed on Canada and Mexico
These included 49% on Cambodian products, 46% on Vietnamese imports and 20% on goods from the EU. 7 March: Trump expands the range of goods exempted from the Canada and Mexico tariffs
Chinese imports were initially due to face 54% tariffs (34% on top of the 20% rate already in place). Trump then increased the total to 104% after China vowed to "fight to the end" and refused to scrap its own retaliatory tariffs of 34% on the US. 12 March: The 25% steel and aluminium tariffs take effect
Hours after the 104% tariff took effect, China announced it would introduce a significantly higher 84% tax on all US imports from 10 April. 26 March: The White House announces 25% duties on cars will apply from 2 April and on car parts at a later date but before 3 May
Trump soon hit back, saying the US would increase tariffs on Chinese goods to 125% effective immediately. 2 April: Trump says the US will impose "reciprocal tariffs" on certain countries, as well as a universal 10% levy on imports from all other countries, including the UK
For now, Chinese manufacturers - and American consumers - still benefit from a tariff exemption for goods in small parcels sent from China worth less than $800 (£624). However that exemption will also end on 2 May. 5 April: The 10% tariffs take effect
These items will be subject to a duty rate of 90% or $75 per item - increasing to $150 per item after 1 June. 9 April: Tariffs on roughly 60 countries - described by the US president as the "worst offenders" - are introduced. Trump then announces a 90-day pause for all countries, except China. The "baseline" 10% rate applies everywhere but China which faces 125% tariffs
What would a US-China trade war do to the world economy? 10 April: China's retaliatory 84% levy on US goods takes effect. The EU says it will pause its planned US tariffs for 90 days
White House officials have described the higher tariffs as "reciprocal". The current exemption for goods in small parcels sent from China worth less than $800 (£624) ends on 2 May. These will have a duty rate of 90% or $75 per item - increasing to $150 per item after 1 June.
Reciprocal would mean they were based on the amount countries charge the US in the form of existing tariffs, plus the cost of meeting non-tariff barriers such as regulations. The "baseline" 10% rate does not apply to Canada and Mexico. There have been a number of exemptions and delays since Trump announced they would face tariffs of 25% on most goods and 10% on Canadian energy.
However, the White House used a different calculation - setting each tariff rate at a level that would eliminate the US's trade deficit in goods with each country.
And some countries, including the UK, have had tariffs applied even though they buy more from the US than they sell to it.
The White House confirmed that some specific goods are exempt - including copper, pharmaceuticals, semiconductors, energy and "other certain materials that are not available in the United States".
Trump has said he plans to remove the exemption for pharmaceutical goods to help shift drug production to America, but it is not clear if or when this might happen.
At a glance: Trump's tariffs on China, EU and more
BBC Verify: How were Donald Trump's tariffs calculated?BBC Verify: How were Donald Trump's tariffs calculated?
How much trade is there between the US and China?
Trump had also previously announced 25% tariffs on goods from Mexico and Canada, and a 10% tariff on Canadian energy imports before introducing a number of exemptions and delays. The US currently runs a trade deficit with China. In 2024, the US imported far more from China ($440bn) than Beijing imported from America ($145bn).
He has also brought in 25% tariffs on all steel and aluminium imports, and foreign-made cars. A 25% tariff on car parts is due to start no later than 3 May. In his first term as president, Trump imposed significant tariffs on China, which were retained and expanded by his successor Joe Biden.
Trump's escalation with China has now put a question mark over US trade with the European Union. The EU, too, has approved retaliatory tariffs against the US, which will come into effect on 15 April. Together those trade barriers helped to reduce the amount the US bought from China from 21% of America's total imports in 2016 to 13% in 2024.
Trump has turned his back on the foundation of US economic might However, China still ships everything from iPhones to children's toys to the US. Analysts have pointed out that some Chinese goods enter the US via other south-east Asian countries, which could mean they can avoid the 125% rate.
Trump's agenda grapples with political and economic reality Why Trump is hitting China on trade - and what might happen next
What would a US-China trade war do to the world economy?
Will prices go up for US consumers?Will prices go up for US consumers?
Many economists expect tariffs to push up prices across a range of imported goods, as firms pass on some or all of their increased costs.Many economists expect tariffs to push up prices across a range of imported goods, as firms pass on some or all of their increased costs.
The products affected could include everything from clothing to coffee and alcohol to electronics.The products affected could include everything from clothing to coffee and alcohol to electronics.
Some firms may also decide to import fewer foreign goods, which could make those which are available more expensive.Some firms may also decide to import fewer foreign goods, which could make those which are available more expensive.
The price of goods manufactured in the US using imported components may also rise.The price of goods manufactured in the US using imported components may also rise.
For example, car parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.For example, car parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.
Car prices had already been expected to increase as a result of earlier tariffs. Car prices had already been expected to increase as a result of earlier tariffs, which remain in place.
The cost of a car made using parts from Mexico and Canada alone could rise by $4,000-$10,000 (£3,035 - £7,588) depending on the vehicle, according to analysts at the Anderson Economic Group.The cost of a car made using parts from Mexico and Canada alone could rise by $4,000-$10,000 (£3,035 - £7,588) depending on the vehicle, according to analysts at the Anderson Economic Group.
The measures could also damage the US economy.
The chance of a recession rose to 50% after Trump's announcement on new tariffs, according to former International Monetary Fund (IMF) chief economist Ken Rogoff.
Trump's top officials have repeatedly played down recession fears, and insisted that the tariffs would be implemented as planned.
Americans could pay more for these everyday basics under Trump's new tariffs
What has happened to stock markets?What has happened to stock markets?
Trump's tariffs announcement has caused significant volatility on global stock markets. Trump's tariffs announcements have caused significant volatility on global stock markets.
Stock markets are where firms sell shares in their business. They reflect the best guess of what every company in the world is worth and what their future profits will be.Stock markets are where firms sell shares in their business. They reflect the best guess of what every company in the world is worth and what their future profits will be.
Share prices have been hit because investors think the new tariffs will increase costs and reduce profits. Many people are affected by stock market price falls - even if they don't invest in shares directly - because of the knock-on effect on pensions, jobs and interest rates.
Many people are affected by stock market falls - even if they don't invest in shares directly - because of the knock-on effect on pensions, jobs and interest rates. Share prices dropped sharply after the global tariffs were announce because investors thought they would increase costs and reduce profits. But after Trump announced the 90-day pause, US, Asian and European markets rebounded sharply.
But after Trump announced the 90-day pause, US markets rebounded sharply.
How does it affect me if share prices fall?How does it affect me if share prices fall?
Stocks, tariffs and pensions - your questions answeredStocks, tariffs and pensions - your questions answered
How will Trump's tariffs affect the UK?How will Trump's tariffs affect the UK?
The UK exported around £58bn of goods to the US in 2024, mainly cars, machinery and pharmaceuticals.The UK exported around £58bn of goods to the US in 2024, mainly cars, machinery and pharmaceuticals.
It was already due to be affected by the earlier tariffs targeting steel, aluminium and car imports.It was already due to be affected by the earlier tariffs targeting steel, aluminium and car imports.
Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff. However, he said US-UK trade talks are ongoing, and that he will "fight for the best deal for Britain".Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff. However, he said US-UK trade talks are ongoing, and that he will "fight for the best deal for Britain".
The UK government has so far not announced any taxes on US imports. However, it is drawing up a list of US products it could hit with retaliatory tariffs.The UK government has so far not announced any taxes on US imports. However, it is drawing up a list of US products it could hit with retaliatory tariffs.
Following the announcement of tariffs, car maker Jaguar Land Rover said it would "pause" all shipments to the US as it worked to "address the new trading terms".Following the announcement of tariffs, car maker Jaguar Land Rover said it would "pause" all shipments to the US as it worked to "address the new trading terms".
Economists have warned US tariffs could knock the UK's economy off course and make it harder for the government to hit its borrowing rules.Economists have warned US tariffs could knock the UK's economy off course and make it harder for the government to hit its borrowing rules.
How PM might tackle impact of Trump tariffsHow PM might tackle impact of Trump tariffs
Three ways Trump's tariffs might affect you and your money How exposed is the UK to Trump's tariff chaos?
Mortgage rates set to drop after tariff turmoil How have other countries responded to Trump's decision to pause the tariffs?
How have other countries responded to Trump's tariffs? For countries on Donald Trump's so-called "worst offenders" list, there was a sigh of relief when tariffs were downgraded to 10%.
EU chief Ursula von der Leyen warned that "the consequences will be dire for millions of people around the globe". EU The European Commission President Ursula von der Leyen said Trump's decision was an "important step towards stabilising the global economy" and said the EU would pause its own retaliatory tariffs for 90 days.
27 EU members approved a list of US products to be taxed in three stages beginning on 15 April, hours before Trump announced his pause and 10% plans. Poland's Prime Minister Donald Tusk urged all parties to "make the best" of the 90 day pause, stressing that maintaining strong relations with the US "is a common responsibility of Europeans and Americans"
Italy's Giorgia Meloni - a Trump ally - said the reciprocal tariffs were "wrong" but that she would work towards a deal with the US to "prevent a trade war". Vietnam's Deputy PM Ho Duc Phoc said that the US and Vietnam expect to start "negotiations on a bilateral trade agreement" which "would include tariff agreements"
In the Republic of Ireland, Micheál Martin said there was "no justification" for "deeply regrettable" tariffs which benefitted "no-one". Germany's incoming Chancellor Friedrich Merz said the pause proves a united European approach to trade has a positive effect, adding: "Europeans are determined to defend ourselves"
Canada introduced a 25% tariff on some vehicles from the US on 9 April. Canada, which has been targeted by tariffs above 10%, introduced a 25% tariff on some vehicles from the US on 9 April.
Australia's Anthony Albanese said "this is not the act of a friend". See the Trump tariffs list by country
South Korea's acting president Han Duck-Soo said "the global trade war has become a reality".
Japan said the 24% levy against its products was "extremely regrettable" and could violate World Trade Organization and US-Japan agreements.