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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 2 months later)
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. New US tariffs covering goods from several key trading partners are due to take effect on 1 August.
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. Since returning to office in January, President Donald Trump has introduced a series of import taxes, and threatened many more.
The move has thrown the world economy into chaos and critics have warned that tariffs are making products more expensive for US consumers. He argues that the tariffs boost American manufacturing and protect jobs.
However, his volatile international trade policy has thrown the world economy into chaos, and a number of firms have increased prices for US consumers as a result.
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 has a $1 tax on top - taking the total cost to the importer $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.
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 did so under national emergency powers.
But the following day, an appeals court said the relevant taxes could stay in place while the case continued.
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 boost 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 - known as the trade deficit. 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 president has announced different tariffs against specific goods, and imports from individual countries.
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. Many of these have been subsequently amended, delayed or cancelled altogether.
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. Critics accuse Trump of making dramatic and sometimes contradictory policy statements as a negotiating tactic to encourage trade partners to agree deals that benefit the US.
But a day later an appeals court allowed those taxes that were enacted under those powere to stay in place while the case continues. Trump has made other demands alongside the tariffs.
US trade court blocks Trump's sweeping tariffs. What happens now? Setting out the first tariffs of his current term against China, Mexico and Canada, he said all three countries must do more to stop migrants and illegal drugs reaching the US.
What tariffs has Trump announced? Separately, on 14 July, Trump threatened to introduce significant tariffs against companies trading with Russia, if a deal to end the war in Ukraine was not reached within 50 days.
Steel and aluminium: Which tariffs has the US put in place on specfic goods?
A 25% import tax on all steel and aluminium entering the US - including products made from these metals - took effect on 12 March. The taxes on goods imported to the US include:
On 4 June, the rate was doubled to 50%. 50% tariff on steel and aluminium imports
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. 50% tariff on copper imports from 1 August
However, Trump warned the UK could end up paying the higher rate "on or after July 9" if the agreement is not fully implemented. 25% tariff on foreign-made cars and imported engines and other car parts
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. On 8 July, Trump threatened to impose a 200% tariff on pharmaceutical imports but no further details have been confirmed.
LIVE: Follow reaction to the doubling of US steel and aluminium tariffs Trump has also said the global tariff exemption covering goods valued at $800 or less will end on 29 August.
European Union (EU): He had already removed the so-called "de minimis" exemption for products from China and Hong Kong, to restrict American's purchase of cheap clothes and household items from commerce sites like Shein and Temu.
Trump initially proposed a 20% tariff on most EU goods, but halved it to 10% until 8 July to allow time for trade talks. The US is the biggest importer of steel in the world after the EU, with most coming from Canada, Brazil, Mexico and South Korea
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. Which tariffs has the US put in place against individual countries?
He later said he would extend this deadline to 9 July. Some of the first tariffs targeting China, Canada and Mexico were subsequently amended, increased or postponed.
China: On 2 April, Trump announced that a "baseline tariff" of 10% would apply to all other imports from all countries.
Trump unveiled a 10% tariff on goods from China on 4 February which doubled to 20% a month later. He said goods from about 60 other trade partners which the White House described as the "worst offenders" - including the EU and China - would face higher rates, as payback for unfair trade policies.
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. These "reciprocal" tariffs were later postponed for 90 days to allow time to negotiate individual trade deals, and the deadline was then extended until 1 August.
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. Trump said the agreement with European Commission President Ursula von der Leyen was "the biggest deal ever made"
In return, Beijing introduced a 125% duty on some US goods. Days before the 1 August deadline, the US and EU agreed that European goods would face 15% tariffs - including cars. Under the deal - which needs to be approved by all 27 EU members - the trading bloc will charge US firms 0% duty on certain products.
After talks in Geneva in May, the US and China agreed to cancel some tariffs altogether and suspend others for 90 days. Other tariff rates which will apply from 1 August include:
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. 50% tariffs on Brazilian goods
However both Washington and Beijing have since accused the other of violating the terms agreed. 25% plus "an unspecified penalty" on Indian goods
China says US has 'severely violated' tariffs truce 20% tariffs on Vietnamese goods
Canada and Mexico: 19% tariffs on Indonesian goods
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. 19% tariffs on on Filipino goods
There have been a number of delays and exemptions to these tariffs. 15% tariffs on Japanese goods
In response, Canada introduced a 25% tax on some vehicles imported from the US on 9 April. 15% tariffs on South Korean goods
Cars: Unless a separate deal is agreed, a 35% tariff will apply to all Canadian goods on top of existing duties. This excludes products covered by the existing North American free trade agreement (NAFTA) between Canada, the US and Mexico.
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. Trump has also said he will impose 30% tariffs on all Mexican goods - or a higher rate to match any retaliatory duties introduced on US imports. Again, this does not include products which meet the terms of NAFTA.
On 29 April, Trump softened the rules to reduce the effect on US car companies. US-Chinese trade negotiations are ongoing.
10% 'baseline' and higher tariffs: The two countries had raised tariffs on each other's goods to more than 100% before temporarily lowering rates for a 90-day period. That pause is set to end on 12 August.
On 2 April, Trump announced most countries - including the UK - would face a 10% "baseline" tariff on all goods sent to the US. How are trade deals actually negotiated?
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. What have the UK and US agreed on tariffs?
Hours later he announced a 90-day pause, during which the 10% "baseline" rate would be paid by all named countries apart from China. At 10%, the UK has negotiated the lowest US tariff rate so far.
In response, many countries are working on retaliatory measures.
Smartphones and computers:
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.
On 23 May, the president threatened to impose a 25% import tax "at least" on Apple iPhones not manufactured in America.
Films:
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?
What have the UK and US agreed?
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 10% rate applies to the first 100,000 UK vehicles exported to the US every year, which is roughly the number of cars sold in 2024. Each vehicle above the quota would face the standard 25% car tariff.
However, the deal includes some exemptions to tariffs being applied to other countries. The agreement also lets the two countries sell beef to each other - although the government insists there will be no change to the UK's higher food safety standards.
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. Some US ethanol will face 0% tariffs, compared to the previous rate of 19%.
The tariff on steel and aluminium is also due to be scrapped completely for imports from the UK. The two countries agreed an initial framework in May. Trump announced "the deal was done" at the G7 summit in Canada in June.
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. However, he did not confirm the expected removal of charges on steel imports from the UK which was outlined in May. Although the UK is the only country which does not have to pay 50% tariffs on steel and aluminium, a 25% tariff remains.
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. Chris Mason: Tariffs deal a triumph for Starmer - up to a point
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 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 global economy responded to Trump's tariffs?
Trump's various announcements have caused volatility on global stock markets, where firms sell shares in their business. Trump's various announcements have caused volatility on global stock markets, where firms sell shares in their business. However markets have recently been more stable.
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.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 sharply at times.
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) and the influential Organization for Economic Co-operation and Development (OECD) both downgraded their predictions 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. Both organisations expect the US economy to be badly affected.
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 latest figures show the US economy grew at an annual rate of 3% between April and June 2025, after shrinking in the first three months of the year.
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.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? Are prices going up for US consumers?
In Depth: There are signs Trump could be ready to retreat on tariffs Analysts say tariffs are already feeding into the overall US inflation rate, as businesses pass on some or all of their higher costs.
Will prices go up for US consumers? Prices rose by 2.7% in the year to June, up from 2.4% the previous month reflecting increases in items including clothing, coffee, toys and appliances.
Price increases are expected across a range of imported goods, as businesses pass on some or all of their higher costs. Adidas has confirmed it will raise prices for American customers as a result of the tariffs. Almost half of the company's products are made in Vietnam and Indonesia which are facing levies of 20% and 19% respectively.
Adidas and Barbie maker Mattel are among the global firms which have said they will charge American customers more. Nike has also said US prices will increase, warning the tariffs could add $1bn (£730m) to its costs.
Some companies may also decide to import fewer foreign goods, which could make those that are available more expensive. Barbie maker Mattel also plans to charge more in the US.
Some companies are choosing to import fewer foreign goods, which can make those which 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 at the border.
Six things that could cost Americans more
How Trump's tariffs are already impacting Americans