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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?
(6 days later)
Watch: What is a tariff? The BBC's Adam Fleming explainsWatch: What is a tariff? The BBC's Adam Fleming explains
As part of an ongoing trade war, US President Donald Trump has placed tariffs of up to 145% on Chinese goods. China has hit back with a 125% tax on US products.As part of an ongoing trade war, US President Donald Trump has placed tariffs of up to 145% on Chinese goods. China has hit back with a 125% tax on US products.
Trump has also introduced a 10% tax on goods from the vast majority of other countries, while pausing much higher rates for dozens of other nations for 90 days.Trump has also introduced a 10% tax on goods from the vast majority of other countries, while pausing much higher rates for dozens of other nations for 90 days.
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.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.
The International Monetary Fund (IMF) has cut its global growth forecast because of the uncertainty caused by tariffs, and says it expects the US to be hit the hardest.The International Monetary Fund (IMF) has cut its global growth forecast because of the uncertainty caused by tariffs, and says it expects the US to be hit the hardest.
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.Typically, they are a percentage of a product's value.
The 10% tariff on goods from most nations means a $10 product would have a $1 tax on top - taking the total cost to $11 (£8.35).The 10% tariff on goods from most nations means a $10 product would have a $1 tax on top - taking the total cost to $11 (£8.35).
The 145% charge on some Chinese goods would take the cost of a $10 product to $24.50.The 145% charge on some Chinese goods would take the cost of a $10 product to $24.50.
Companies that bring foreign goods into the US have to pay the tax to the government.Companies that bring foreign goods into the US have to pay the tax to the government.
They may pass some or all of the increased cost on to customers.They may pass some or all of the increased cost on to customers.
Why is Trump using tariffs?Why is Trump using tariffs?
Trump says tariffs 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 says tariffs 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 wants to reduce the gap between the value of goods the US buys from other countries and those it sells to them. He argues that America has been taken advantage of by "cheaters" and "pillaged" by foreigners.He wants to reduce the gap between the value of goods the US buys from other countries and those it sells to them. He argues that America has been taken advantage of by "cheaters" and "pillaged" by foreigners.
The US president has 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.The US president has 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 tariffs policy but influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.Trump has strongly defended his tariffs policy but influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.
Announcing its latest forecasts, the IMF has said Trump's tariffs mean that it now expects the global economy to grow by 2.8% in 2025, which is down from its previous estimate of 3.3%. US growth is now predicted to be 1.8% for the year, down from the 2.7% that had been anticipated in January.Announcing its latest forecasts, the IMF has said Trump's tariffs mean that it now expects the global economy to grow by 2.8% in 2025, which is down from its previous estimate of 3.3%. US growth is now predicted to be 1.8% for the year, down from the 2.7% that had been anticipated in January.
The IMF also believes a US recession in 2025 has become more likely.The IMF also believes a US recession in 2025 has become more likely.
Why Beijing is not backing down on tariffsWhy Beijing is not backing down on tariffs
Is the US making $2bn a day from tariffs?Is the US making $2bn a day from tariffs?
China now produces 60% of the world's electric cars – a large proportion of them made by its own homegrown brandsChina now produces 60% of the world's electric cars – a large proportion of them made by its own homegrown brands
What has Trump announced on tariffs?What has Trump announced on tariffs?
Since Trump's inauguration in January there has been a flurry of announcements on tariffs, with other countries scrambling to respond.Since Trump's inauguration in January there has been a flurry of announcements on tariffs, with other countries scrambling to respond.
Mexico and Canada:Mexico and Canada:
Canada and Mexico were targeted by Trump back in February during an earlier round of raised tariffs. The president announced a 25% tax on exports from both countries to the US and a 10% levy on Canadian energy.Canada and Mexico were targeted by Trump back in February during an earlier round of raised tariffs. The president announced a 25% tax on exports from both countries to the US and a 10% levy on Canadian energy.
There have since been a number of exemptions and delays. Trump's "baseline" 10% rate does not apply to them.There have since been a number of exemptions and delays. Trump's "baseline" 10% rate does not apply to them.
Steel and aluminium:Steel and aluminium:
A 25% import tax on all steel and aluminium entering the US, including products made from these metals took effect on 12 March.A 25% import tax on all steel and aluminium entering the US, including products made from these metals took effect on 12 March.
Cars:Cars:
The White House announced in March that 25% duties on cars would apply from 2 April.The White House announced in March that 25% duties on cars would apply from 2 April.
A similar 25% levy on car parts is due to come in by 3 May.A similar 25% levy on car parts is due to come in by 3 May.
Higher tariffs announced and paused:Higher tariffs announced and paused:
Tariffs on roughly 60 countries, which were described by the US president as the "worst offenders", were introduced on 9 April.Tariffs on roughly 60 countries, which were described by the US president as the "worst offenders", were introduced on 9 April.
Trump then announced a 90-day pause, during which the 10% "baseline" rate will be paid, excluding China.Trump then announced a 90-day pause, during which the 10% "baseline" rate will be paid, excluding China.
China:China:
A 10% tariff on goods from China to the US was unveiled in February - alongside the taxes on products from Mexico and Canada.A 10% tariff on goods from China to the US was unveiled in February - alongside the taxes on products from Mexico and Canada.
Tariffs for China have since increased to 125%.Tariffs for China have since increased to 125%.
However, for some Chinese products taxes will be set at 145%, due to a previous 20% levy for those producing the drug fentanyl. The White House said the combination of different tariffs could mean some goods will face a 245% levy.However, for some Chinese products taxes will be set at 145%, due to a previous 20% levy for those producing the drug fentanyl. The White House said the combination of different tariffs could mean some goods will face a 245% levy.
China put tariffs on US imports at 125% from 12 April and has said it will not respond to any further US increases because they will become a "joke".China put tariffs on US imports at 125% from 12 April and has said it will not respond to any further US increases because they will become a "joke".
Smartphones and computers:Smartphones and computers:
An exemption for some electronic devices including smartphones and computers, backdated to 5 April, was announced on 12 April.An exemption for some electronic devices including smartphones and computers, backdated to 5 April, was announced on 12 April.
But Trump later said exemptions for technology from China could be short lived.But Trump later said exemptions for technology from China could be short lived.
Small parcels:Small parcels:
The current "de minimis" exemption for Chinese goods worth less than $800 ends on 2 May. These will have a duty rate of 90% or $75 per item - increasing to $150 per item after 1 June.The current "de minimis" exemption for Chinese goods worth less than $800 ends on 2 May. These will have a duty rate of 90% or $75 per item - increasing to $150 per item after 1 June.
BBC Verify: How were Donald Trump's tariffs calculated?BBC Verify: How were Donald Trump's tariffs calculated?
Good cops, bad cops - how Trump's shifting tariff team kept world guessingGood cops, bad cops - how Trump's shifting tariff team kept world guessing
How much trade is there between the US and China?How much trade is there between the US and China?
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).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).
In his first term as president, Trump imposed significant tariffs on China, which were retained and expanded by his successor Joe Biden.In his first term as president, Trump imposed significant tariffs on China, which were retained and expanded by his successor Joe Biden.
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.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.
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 neighbouring South East Asian countries, which could mean they can avoid the tariffs of up to 145%.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 neighbouring South East Asian countries, which could mean they can avoid the tariffs of up to 145%.
There have been some indications that that the trade war with China may ease.There have been some indications that that the trade war with China may ease.
US Treasury Secretary Scott Bessent said he expected a de-escalation of the trade war, describing the current situation as unsustainable.US Treasury Secretary Scott Bessent said he expected a de-escalation of the trade war, describing the current situation as unsustainable.
On 22 April, Trump said he would be "very nice" in negotiations with Beijing, and that tariffs would fall if there was a deal - but not to "zero".On 22 April, Trump said he would be "very nice" in negotiations with Beijing, and that tariffs would fall if there was a deal - but not to "zero".
Why Trump is hitting China on trade - and what might happen nextWhy Trump is hitting China on trade - and what might happen next
What would a US-China trade war do to the world economy?What would a US-China trade war do to the world economy?
Designed in US, made in China: Why Apple is stuckDesigned in US, made in China: Why Apple is stuck
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 that are available more expensive.Some firms may also decide to import fewer foreign goods, which could make those that 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, which remain in place.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 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 depending on the vehicle, according to analysts at the Anderson Economic Group.
The new tariffs have also resulted in tighter customs checks at the US border which have led to delays.The new tariffs have also resulted in tighter customs checks at the US border which have led to delays.
DHL said it had suspended deliveries to US consumers worth more than $800 because of the "significant increase" in red tape. Hongkong Post has also said it will stop sending parcels to America from 27 April. temporarily suspended deliveries to US consumers worth more than $800 because of the "significant increase" in red tape, but resumed its activities after negotiations with US officials.
What has happened to stock markets?What has happened to stock markets?
Trump's tariffs announcements have 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.
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 price falls, even if they don't invest in shares directly, because of the knock-on effect on pensions, jobs and interest rates.
The value of the dollar against other world currencies has also fallen. The US dollar is usually considered to be a safe asset when the markets are in turmoil but earlier in April it fell to its lowest level since 2022.The value of the dollar against other world currencies has also fallen. The US dollar is usually considered to be a safe asset when the markets are in turmoil but earlier in April it fell to its lowest level since 2022.
Trump's fierce criticism of the US central bank chief Jerome Powell as a "major loser" for not cutting interest rates has also undermined confidence in the currency, although he later clarified that he had no plans to sack Powell.Trump's fierce criticism of the US central bank chief Jerome Powell as a "major loser" for not cutting interest rates has also undermined confidence in the currency, although he later clarified that he had no plans to sack Powell.
How does it affect me if share prices fall?How does it affect me if share prices fall?
Why does it matter if the US dollar falls?Why does it matter if the US dollar falls?
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.Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff.
The UK is looking to negotiate a trade deal to soften the 10% tariffs, but one of President Trump's advisers suggests any such deal would have to be "extraordinary".The UK is looking to negotiate a trade deal to soften the 10% tariffs, but one of President Trump's advisers suggests any such deal would have to be "extraordinary".
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, carmaker 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, carmaker 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 the prime minister might tackle impact of Trump tariffsHow the prime minister might tackle impact of Trump tariffs
How exposed is the UK to Trump's tariff chaos?How exposed is the UK to Trump's tariff chaos?
How have other countries responded to Trump's decision to pause the tariffs?How have other countries responded to Trump's decision to pause the tariffs?
The countries on Trump's so-called "worst offenders" list which had been facing significantly higher tariffs are still dealing with the impact of the temporary baseline 10% rate.The countries on Trump's so-called "worst offenders" list which had been facing significantly higher tariffs are still dealing with the impact of the temporary baseline 10% rate.
The European Union is among those seeking a trade deal with the US during this 90-day higher tariff pause. The bloc is also "developing retaliatory measures" in case talks fail, EU chief Ursula von der Leyen has said.The European Union is among those seeking a trade deal with the US during this 90-day higher tariff pause. The bloc is also "developing retaliatory measures" in case talks fail, EU chief Ursula von der Leyen has said.
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".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".
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".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".
Vietnam's Deputy Prime Minister Ho Duc Phoc said the US and Vietnam expect to start "negotiations on a bilateral trade agreement", which "would include tariff agreements".Vietnam's Deputy Prime Minister Ho Duc Phoc said the US and Vietnam expect to start "negotiations on a bilateral trade agreement", which "would include tariff agreements".
Canada, which has been targeted by tariffs above 10%, 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.
See the Trump tariffs list by countrySee the Trump tariffs list by country