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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)
In recent months, US President Donald Trump has announced a series of tariffs - import taxes on goods from other countries - arguing they will boost American manufacturing and protect jobs. US President Donald Trump has doubled US tariffs on steel and aluminium imports to 50% - but the UK will not initially face the higher rate.
The move has thrown the world economy into chaos and critics have argued that tariffs will make products more expensive for US consumers. Since taking office in January, Trump has announced a series of import taxes on goods from other countries - arguing they will boost American manufacturing and protect jobs.
At the end of May, a US trade court ruled that Trump did not have the authority to impose the sweeping import taxes. But a day later an appeals court allowed the tariffs to stay in place while the case is litigated. The move has thrown the world economy into chaos and critics have warned that tariffs are making products more expensive for US consumers.
US trade court blocks Trump's sweeping tariffs. What happens now?
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.
A 10% tariff means a $10 product would have a $1 tax on top - taking the total cost to $11 (£8.35).A 10% tariff means a $10 product would have a $1 tax on top - taking the total cost to $11 (£8.35).
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 extra cost on to customers. Firms may also decide to import fewer goods.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.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 US president has made other demands alongside tariffs.
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.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.
At the end of May, a US trade court ruled that Trump did not have the authority to impose some of the tariffs he has announced, because he invoked national emergency powers to do so.
But a day later an appeals court allowed those taxes that were enacted under those powere to stay in place while the case continues.
US trade court blocks Trump's sweeping tariffs. What happens now?
What tariffs has Trump announced?What tariffs has Trump announced?
European Union: Steel and aluminium:
Trump has said he is recommending a 50% tariff on all goods from the European Union being imported to the United States. A 25% import tax on all steel and aluminium entering the US - including products made from these metals - took effect on 12 March.
He initially proposed a 20% tariff on most EU goods, but halved it to 10% until 8 July to allow time for talks. On 4 June, the rate was doubled to 50%.
"Our discussions with them are going nowhere!" he wrote in a post on social media on Friday. He said the new tariffs would kick in on 1 June. The UK has been temporarily exempted from the higher rate, because of a deal signed with the Trump administration in May, which would see the steel and aluminium levy axed altogether.
However, Trump warned the UK could end up paying the higher rate "on or after July 9" if the agreement is not fully implemented.
The US is the biggest importer of steel in the world after the European Union, getting most of the metal from Canada, Brazil, Mexico and South Korea.
LIVE: Follow reaction to the doubling of US steel and aluminium tariffs
European Union (EU):
Trump initially proposed a 20% tariff on most EU goods, but halved it to 10% until 8 July to allow time for trade talks.
At the end of May he expressed frustration with the lack of progress and threatened to introduce a higher rate of 50% rate on 1 June.
He later said he would extend this deadline to 9 July.
China:China:
The US and China ramped up huge tariffs against one another in recent months, but have now reached an agreement for significant reductions. Trump unveiled a 10% tariff on goods from China on 4 February which doubled to 20% a month later.
Trump unveiled a 10% tariff on goods from China on 4 February, which doubled to 20% a month later. On 2 April, Trump imposed a universal 10% baseline tariff on all imports to the US, on what he called "Liberation Day". But some nations, including China, were subjected to higher rates.
On 2 April, Trump announced a universal 10% baseline tariff on all imports to the US, on what he called "Liberation Day". But some nations, including China, were subjected to higher rates. China retaliated with its own tariffs, and a war of words between President Xi and Trump led to the US imposing a 145% levy on Chinese imports, on 9 April.
China retaliated with tariffs of its own, and the ratcheting up of taxes ultimately led to the US imposing a 145% tariff on Chinese imports, on 9 April. In return, Beijing introduced a 125% duty on some US goods.
Beijing had a 125% levy on some US goods. After talks in Geneva in May, the US and China agreed to cancel some tariffs altogether and suspend others for 90 days.
However, the US and China have now both suspended all but 10% of their Liberation Day tariffs for 90 days, starting on 14 May. They have cancelled other retaliatory levies.
This will cut US tariffs on Chinese imports to 30%, while Chinese tariffs on US imports will be reduced to 10%.
The US measures still include 20% aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.The US measures still include 20% aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.
However both Washington and Beijing have since accused the other of violating the terms agreed.
China says US has 'severely violated' tariffs truce
Canada and Mexico: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.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.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.In response, Canada introduced a 25% tax on some vehicles imported from the US on 9 April.
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.
Cars:Cars:
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.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.
On 29 April, Trump softened the rules to reduce the effect on US car companies.On 29 April, Trump softened the rules to reduce the effect on US car companies.
10% 'baseline' and higher tariffs:10% 'baseline' and higher tariffs:
On 2 April, Trump announced most countries - including the UK - would face a 10% "baseline" tariff on all goods sent to the US.On 2 April, Trump announced most countries - including the UK - would face a 10% "baseline" tariff on all goods sent to the US.
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.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.
Hours later he announced a 90-day pause, during which the 10% "baseline" rate would be paid by all named countries apart from 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.
In response, many countries are working on retaliatory measures.In response, many countries are working on retaliatory measures.
Smartphones and computers:Smartphones and computers:
An exemption for some electronic devices from China and elsewhere - including smartphones and computers - was announced on 12 April.An exemption for some electronic devices from China and elsewhere - including smartphones and computers - was announced on 12 April.
Trump later warned the concession could be short lived.Trump later warned the concession could be short lived.
On 23 May, the president threatened to impose a 25% import tax "at least" on Apple iPhones not manufactured in America.On 23 May, the president threatened to impose a 25% import tax "at least" on Apple iPhones not manufactured in America.
Films:Films:
On 4 May, Trump said he wanted to introduce a 100% tariff on foreign films to boost the US movie industry.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 countrySee the Trump tariffs list by country
BBC Verify: How were Donald Trump's tariffs calculated?BBC Verify: How were Donald Trump's tariffs calculated?
What have the UK and US agreed?What have the UK and US agreed?
The UK and the US have reached a narrow agreement over tariffs on some goods traded between the countries. The UK and the US reached a narrow agreement over tariffs on some goods traded between the countries in May but this has not yet taken full effect.
The UK exported about £58bn of goods to the US in 2024, mainly cars, machinery and pharmaceuticals.The UK exported about £58bn of goods to the US in 2024, mainly cars, machinery and pharmaceuticals.
The blanket 10% tariffs on imports from countries around the world still applies to most UK goods.The blanket 10% tariffs on imports from countries around the world still applies to most UK goods.
But the deal means there are some exemptions to tariffs being applied to other countries. However, the deal includes some exemptions to tariffs being applied to other countries.
The additional 25% import tax the US had placed on cars has now been cut to 10% for a maximum 100,000 UK cars - about the number the UK exported last year. The agreement cuts the 25% import tax on cars to 10% for up to 100,000 cars - about the number the UK exported to the US in 2024.
A 25% tariff on steel and aluminium imports into the US that came into effect in March has also been scrapped for the UK. The tariff on steel and aluminium is also due to be scrapped completely for imports from the UK.
There will be a quota for how much steel can be exported, although it is currently unclear how much this will cover. There will be a quota for how much UK steel can be exported to the US, although it is not yet clear how much this will cover.
In return, the UK has scrapped a 20% tariff on US beef and raised the quota from 1,000 to 13,000 metric tonnes. The UK has said there will be no weakening of food standards on beef. In return, the UK is scrapping a 20% tariff on US beef and raising the quota from 1,000 to 13,000 metric tonnes. But minister said there would be no weakening of UK food standards on beef.
The UK's temporary exemption from higher steel and aluminium tariffs was agreed after Business Secretary Jonathan Reynolds met US Trade Representative Jamieson Greer in Paris.
Trump deal is a significant achievement for StarmerTrump deal is a significant achievement for Starmer
What is in the UK-US tariff deal?What is in the UK-US tariff deal?
How has the world economy responded to Trump's tariffs?How has the world economy responded to Trump's tariffs?
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. 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 value of the US dollar, usually considered a safe asset, has also fallen in recent months.The value of the US dollar, usually considered a safe asset, has also fallen in recent months.
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.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.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. At the start of June the influential Organization for Economic Co-operation and Development (OECD) also downgraded its forecast for worldwide growth in 2025, blaming the "significant" rise in trade barriers such as tariffs.
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. It warned that "weakened economic prospects will be felt around the world, with almost no exception".
As Trump marked 100 days in power in May, the commerce department said the US economy shrank in the first three months of 2025, after strong growth in the last quarter of 2024.
The president insists his trade 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?Is the US making $2bn a day from tariffs?
In Depth: There are signs Trump could be ready to retreat on tariffsIn Depth: There are signs Trump could be ready to retreat on tariffs
Will prices go up for US consumers?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.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.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.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.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.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.The new tariffs have also resulted in tighter customs checks at the US border, leading to delays.