This article is from the source 'bbc' and was first published or seen on . The next check for changes will be

You can find the current article at its original source at https://www.bbc.com/news/articles/cn93e12rypgo

The article has changed 72 times. There is an RSS feed of changes available.

Version 70 Version 71
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?
(14 days later)
Since returning to office in January, US President Donald Trump has introduced a sweeping global programme of tariffs, and threatened many more. President Donald Trump has introduced tariffs on goods reaching the US from countries around the world.
Imports from countries with which Trump has political grievances are subject to particularly high rates. Goods from other countries who have agreed trade deals face lower duties. Trump argues that the move will boost American manufacturing and create jobs, but critics warn of higher prices and damage to the global economy.
Trump argues that the tariffs boost American manufacturing and protect jobs, but the volatility of his 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 on imported goods.
Typically, they are a percentage of a product's value. Typically, the charge is a percentage of a good's value.
A 10% tariff means a $10 product has a $1 tax on top - taking the total cost to the importer of $11 (£8.20). For example, a 10% tariff on a $10 product would mean a $1 tax on top - taking the total cost to $11 (£8.13).
Companies that bring foreign goods into the US have to pay the tax to the government. The tax is paid to the government by companies bringing in the foreign products.
They may pass some or all of the extra cost on to customers. Firms may also decide to import fewer goods. These firms may pass some or all of the extra cost on to their customers, which in this case means ordinary Americans and other US businesses.
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. They may also decide to import fewer goods.
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 boost investment. Trump says tariffs will increase the amount of tax raised by the government, encourage consumers to buy more American-made goods, and boost investment in the US.
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. He wants to reduce the US trade deficit - the gap between the value of goods it buys from other countries and those it sells to them.
The president has announced different tariffs against specific goods, and imports from individual countries. The president argues that the US has been taken advantage of by "cheaters", and "pillaged" by foreigners.
Many of these have been subsequently amended, delayed or cancelled altogether. Trump has also used the taxes to make other demands.
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. For example, when announcing tariffs against China, Mexico and Canada, he said the countries must do more to stop migrants and illegal drugs reaching the US.
Trump has made other demands alongside the tariffs. He has also threatened tariffs against countries trading with Russia, unless a deal to end the war in Ukraine is reached.
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. Many tariffs have been amended or delayed after being 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. They have also faced numerous legal challenges.
Which tariffs has the US put in place on specific goods? In August, a US appeals court ruled that most tariffs announced by Trump are illegal.
The taxes on goods imported to the US include: The White House asked the Supreme Court to overturn the decision. It has confirmed it will hear arguments in the case in the first week of November.
50% tariff on steel and aluminium imports What are Trump's tariffs on individual countries?
50% tariff on copper imports A patchwork of different rates is in place. Together they have lifted the average US tariff from less than 2.5% at the start of 2025 to more than 18%, according to analysts.
25% tariff on foreign-made cars and imported engines and other car parts Many tariffs stem from Trump's announcement in April that a "baseline" of 10% would apply to imports from all countries. Nations considered the "worst offenders" would face higher rates, as payback for unfair trade policies.
On 8 July, Trump threatened to impose a 200% tariff on pharmaceutical imports but no further details have been confirmed. New tariff rates for dozens of countries were introduced in August, after delays to allow for trade talks. They include:
Trump has also said the global tariff exemption covering goods valued at $800 or less will end on 29 August. 50% tariffs on Indian goods - including a 25% penalty for trade with Russia
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.
It means that while gifts worth less than $100 will remain duty-free, all other packages will face the same tariff rate as other goods from their country of origin.
Some international postal services - including Royal Mail and Germany's DHL - said they would temporarily suspend parcel deliveries to the US while they clarify how the new rules will work in practice.
The US is the biggest importer of steel in the world after the EU, with most coming from Canada, Brazil, Mexico and South Korea
Which tariffs has the US put in place against individual countries?
A patchwork of different rates is now in effect.
Many of these stem from an announcement on 2 April, when Trump said a "baseline tariff" of 10% would apply to all other imports from all countries.
The US president said goods from about 60 other trade partners which the White House described as the "worst offenders" would face higher rates, as payback for unfair trade policies.
These "reciprocal" tariffs were later postponed for 90 days to allow time to negotiate individual trade deals. The deadline was then extended until 1 August and then to 7 August.
Tariff rates that are now in effect include:
50% tariffs on Indian goods
50% tariffs on Brazilian goods50% tariffs on Brazilian goods
30% tariffs on South African goods30% tariffs on South African goods
20% tariffs on Vietnamese goods20% tariffs on Vietnamese goods
19% tariffs on Indonesian goods
19% tariffs on Filipino goods
15% tariffs on Japanese goods15% tariffs on Japanese goods
15% tariffs on South Korean goods15% tariffs on South Korean goods
The European Union (EU) managed to strike a deal with the US during Trump's window for negotiations. Negotiations are ongoing with a number of countries, including America's top three trading partners - which have all been warned that they would face particularly high tariffs:
In late July, the two sides 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. China and the US had threatened tariffs of more than 100% on each other's goods, but have extended a truce until November. This will allow time for further discussions about "unfair trade practices" and to address national security issues, the White House said
Trump said the agreement with European Commission President Ursula von der Leyen was "the biggest deal ever made" Canada - which had faced tariffs of up to 35% - and the US are also continuing their negotiations. Canadian Prime Minister Mark Carney said it would drop some retaliatory tariffs to "re-establish free trade for the vast majority" of goods
Some of the first tariffs that were announced during Trump's second presidency targeted China, Canada and Mexico. These were later amended, increased or postponed. Mexico was given a reprieve on tariffs of 30% or more until the end of October, to allow time to strike a deal
A 35% tariff will also 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. What deals have the UK and EU made on tariffs?
However, Trump has delayed imposing higher tariffs on all Mexican goods for another 90 days to strike a deal. Earlier, Trump had threated 30% or a higher rate to match any retaliatory duties introduced on US imports. At 10%, the UK has negotiated the lowest US tariff rate so far of any country that has struck a deal with Trump.
US-Chinese trade negotiations are ongoing. It exported about £58bn of goods to the US in 2024 - mainly cars, machinery and pharmaceuticals.
The two countries had raised tariffs on each other's goods to more than 100% before temporarily lowering rates for a 90-day period. The 10% rate applies to the first 100,000 UK vehicles exported every year - roughly the number of cars sold in 2024. Additional vehicles face the standard 25% tariff.
That pause, which was set to end on 12 August, was extended for another 90 days to 10 November. The agreement also lets the two countries sell beef to each other. Some US ethanol will face 0% tariffs, instead of 19%.
How are trade deals actually negotiated? Trump announced "the deal was done" in June, but did not confirm the expected removal of charges on steel imports from the UK.
What have the UK and US agreed on tariffs? However, the UK is the only country which does not face 50% tariffs on steel and aluminium, paying 25% instead.
At 10%, the UK has negotiated the lowest US tariff rate so far. In late July, the European Union (EU) said it had reached a framework deal with the US.
The UK exported about £58bn of goods to the US in 2024, mainly cars, machinery and pharmaceuticals. It means most EU goods will face 15% tariffs - half the rate Trump had threatened.
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. The trading bloc would charge US firms 0% duty on certain products, subject to approval by its 27 member states.
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. Which goods are affected by Trump's tariffs?
Some US ethanol will face 0% tariffs, compared to the previous rate of 19%. Some taxes announced by Trump are on particular products, wherever they are made.
The two countries agreed an initial framework in May. Trump announced "the deal was done" at the G7 summit in Canada in June. These include:
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. 50% tariff on steel and aluminium imports (except for those from the UK)
Chris Mason: Tariffs deal a triumph for Starmer - up to a point 50% tariff on copper imports
What is in the UK-US tariff deal? 25% tariff on most foreign-made cars, engines and other car parts
UK car sales to US rise following tariff deal The US is the biggest importer of steel in the world after the EU, with most coming from Canada, Brazil, Mexico and South Korea
How has the global economy responded to Trump's tariffs? In addition, an exemption for imports valued at $800 (£592) or less has ended.
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. It means low-cost goods will no longer be duty-free - a move affecting millions of packages sent every day, including those from online retailers like Shein and Temu.
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 companies shipping the parcels will pay duties based on the tariff rate which applies to the country from where the goods were sent. Otherwise, for six months, they can choose to pay a fixed fee of between $80 and $200 per package.
The value of the US dollar, usually considered a safe asset, has also fallen sharply at times. Trump has also threatened tariffs of 100% on semiconductors and up to 250% on pharmaceutical products.
How does it affect me if share prices fall?
Why does it matter if the US dollar falls?
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.
Both organisations expect the US economy to be badly affected.
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.
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.
Are prices going up for US consumers?Are prices going up for US consumers?
Analysts say tariffs are already feeding into the overall US inflation rate, as businesses pass on some or all of their higher costs. The impact of Trump's policies is only starting to be felt, although shoppers have already seen prices rise for some products.
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. The cost of tomatoes, for example, rose 3.3% between June and July, while coffee was up 2.3%.
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. However, overall inflation has remained relatively muted, with prices up 2.7% in the 12 months to July.
Nike has also said US prices will increase, warning the tariffs could add $1bn (£730m) to its costs. Experts say there could be further price rises in the months ahead as firms adjust to the higher tariff rates which were introduced in August.
Barbie maker Mattel also plans to charge more in the US. Firms such as Target and Walmart, as well as popular brands such as Adidas, are among companies warning about price rises.
Some companies are choosing to import fewer foreign goods, which can make those which are available more expensive. The cost of goods manufactured in the US using imported components is 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 at the border. How have tariffs affected the economy?
Six things that could cost Americans more Trump was accused of throwing the global economy into turmoil when he announced the introduction of tariffs.
How Trump's tariffs are already impacting Americans Although financial markets have since recovered, the International Monetary Fund (IMF) has predicted that tariffs will still lead to uncertainty and slower growth.
In July, it forecast global growth of 3% in 2025 and 3.1% in 2026 - below the 3.3% it had projected for both years before Trump's measures were announced.
The tariffs have hit the economies of key US trade partners particularly hard.
In Canada, unemployment has jumped to 7.1% and major forecasters expect growth of roughly 1.25% in 2025, compared to 1.8% predicted in January.
Meanwhile, growth in China held up better than expected in the first half of the year, even as exports to the US plunged.
In the US, the economy is also slowing, though big swings in trade have clouded the data.
The latest figures show the economy grew at an annual rate of 3% between April and June 2025, after shrinking in the first three months of the year.
The US government's tariff revenues have shot up. Official US data shows that in June 2025 they were $28bn, triple the monthly total in 2024.
The Congressional Budget Office, an independent watchdog, estimated in June that the tariffs imposed between 6 January and 13 May 2025 would reduce government borrowing in the 10 years to 2035 by $2.5tn.
However, it also suggested tariffs would shrink the overall size of the US economy.