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?
(7 days later)
Watch: What is a tariff? The BBC's Adam Fleming explains
A number of firms including Adidas have warned they will put up prices for US customers
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.
US President Donald Trump has announced a series of new import taxes, arguing these will boost American manufacturing and protect jobs.
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.
But these tariffs have thrown the world economy into chaos and prices for many products are set to rise for US consumers.
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.
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).
A10% tariff 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.
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 extra cost on to customers. Firms may also decide to import fewer goods.
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.
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.
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.
When he announced the first tariffs of his current term against China, Mexico and Canada, he said he wanted them to do more to stop migrants and illegal drugs reaching the US.
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.
What tariffs has Trump announced?
The IMF also believes a US recession in 2025 has become more likely.
China:
Why Beijing is not backing down on tariffs
Chinese imports to the US include everything from iPhones and electrical goods to children's toys and clothing.
Is the US making $2bn a day from tariffs?
Trump unveiled a 10% tariff on goods from China on 4 February, which doubled to 20% a month later.
China now produces 60% of the world's electric cars – a large proportion of them made by its own homegrown brands
On 9 April, he increased tariffs to 145% for most Chinese goods - with certain products facing a 245% tax.
What has Trump announced on tariffs?
An exemption for Chinese goods worth less than $800 ended on 2 May. Shipments now face 90% duty or $75 per item - increasing to $150 per item after 1 June.
Since Trump's inauguration in January there has been a flurry of announcements on tariffs, with other countries scrambling to respond.
In response to Trump's measures, China has introduced 125% tariffs on US imports.
Mexico and Canada:
Trump also imposed significant tariffs on China during his first presidential term. These were expanded by his successor Joe Biden, which cut the amount America imports from Beijing.
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.
But the US still buys much more from China ($440bn) than it sells to it ($145bn).
There have since been a number of exemptions and delays. Trump's "baseline" 10% rate does not apply to them.
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Canada and Mexico:
Canada and Mexico were also targeted by Trump in February, when he introduced a 25% tax on imports from both countries and a 10% levy on Canadian energy.
There have been a number of delays and exemptions to these tariffs.
In response, Canada introduced a 25% tax on some vehicles imported from the US on 9 April.
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.
Since 2 April, foreign-made cars have faced a 25% levy. This was extended to cover imported engines and other car parts on 3 May.
A similar 25% levy on car parts is due to come in by 3 May.
On 29 April, Trump softened the rules to reduce the effect on US car companies.
Higher tariffs announced and paused:
10% 'baseline' and higher tariffs:
Tariffs on roughly 60 countries, which were described by the US president as the "worst offenders", were introduced on 9 April.
On 5 April, Trump announced most countries - including the UK - would face a 10% "baseline" tariff on all goods sent to the US.
Trump then announced a 90-day pause, during which the 10% "baseline" rate will be paid, excluding China.
On 9 April, he unveiled a range of much higher tariffs for about 60 countries, described as the "worst offenders" among America's trading partners.
China:
Hours later he announced a 90-day pause, during which the 10% "baseline" rate would be paid by all named countries apart from China.
A 10% tariff on goods from China to the US was unveiled in February - alongside the taxes on products from Mexico and Canada.
In response, many countries are working on retaliatory measures.
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.
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 from China and elsewhere - including smartphones and computers - was announced on 12 April.
But Trump later said exemptions for technology from China could be short lived.
Trump later warned the concession could be short lived.
Small parcels:
Films:
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.
On 4 May, Trump said he wanted to introduce a 100% tariff on foreign films to boost the US movie industry.
See the Trump tariffs list by country
BBC Verify: How were Donald Trump's tariffs calculated?
BBC Verify: How were Donald Trump's tariffs calculated?
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How has the world economy responded to Trump's tariffs?
How much trade is there between the US and China?
Trump's various announcements have caused volatility on global stock markets, where firms sell shares in their business. Many people are affected by stock market price changes, even if they don't invest in shares directly, because of the knock-on effect on pensions, jobs and interest rates.
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 value of the US dollar, usually considered a safe asset, has also fallen in recent months.
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.
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.
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".
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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.
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.
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.
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 new tariffs have also resulted in tighter customs checks at the US border which have led to delays.
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?
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.
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.
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?
The International Monetary Fund (IMF) downgraded its prediction for global economic growth in 2025 as a result of the tariffs.
It expects America to be hardest hit, and says a US recession is now more likely in 2025.
As Trump marked 100 days in power, the commerce department said the US economy shrank in the first three months of 2025, after strong growth in the previous quarter.
The president insists his policy is working, but influential voices within his own Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.
Is the US making $2bn a day from tariffs?
In Depth: There are signs Trump could be ready to retreat on tariffs
Will prices go up for US consumers?
Price increases are expected across a range of imported goods, as businesses pass on some or all of their higher costs.
Adidas and Barbie maker Mattel are among the global firms which have said they will charge American customers more.
Some companies may also decide to import fewer foreign goods, which could make those that are available more expensive.
The costs of goods manufactured in the US using imported components are also expected to rise.
For example, car parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.
The new tariffs have also resulted in tighter customs checks at the US border, leading to delays.
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.
Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff, as well as the earlier taxes targeting steel, aluminium and car imports.
Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff.
Carmaker Jaguar Land Rover said it would "pause" all shipments to the US as it worked to "address the new trading terms".
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 in the process of trying to negotiate a trade deal to soften the financial blow from the tariffs - including the proposed levy on foreign films, which could damage the UK entertainment industry.
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.
Ministers have so far not announced any taxes on US imports. However, they are drawing up a list of US products which could be targeted.
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 financial 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 tariffs
How 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?
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.
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".
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.
