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What are tariffs, why is Trump using them, and will prices rise? What are tariffs, why is Trump using them, and will prices rise?
(6 days later)
US President Donald Trump has imposed new tariffs on imports from Mexico and Canada, and has doubled the levy recently put on Chinese goods. Watch: What is a tariff? The BBC's Adam Fleming explains
But the day after these began, Trump announced a month-long exemption for US carmakers, who were expected to be badly affected. US President Donald Trump has said he will double tariffs on Canadian steel and aluminium imports from the planned 25% to 50%.
He previously announced tariffs on all steel and aluminium imports. He has already imposed separate 25% tariffs on other imports from Mexico and Canada, but almost immediately announced an exemption for carmakers and then expanded this to cover other goods.
Canada and China have retaliated with tariffs of their own against US goods, sparking fears of a global trade war and higher prices. He has also put in place a 20% levy on Chinese goods.
Canada and China have retaliated with tariffs of their own against US goods, sparking fears of a global trade war.
Live: Reaction as Trump orders 50% tariffs on Canadian steel and aluminium
European stocks steady after US markets plunge over tariff fears
What are tariffs and how do they work?What are tariffs and how do they work?
Tariffs are taxes charged on goods imported from other countries.Tariffs are taxes charged on goods imported from other countries.
The companies that bring the foreign goods into the country pay the tax to the government.The companies that bring the foreign goods into the country pay the tax to the government.
Typically, tariffs are a percentage of a product's value. Imposing a 20% tariff on Chinese goods means a product worth $10 (£7.76) would have an additional $2 charge applied to it. Typically, tariffs are a percentage of a product's value. A 20% tariff on Chinese goods means a product worth $10 (£7.76) has an additional $2 charge.
Firms may choose to pass on some or all of the cost of tariffs to customers.Firms may choose to pass on some or all of the cost of tariffs to customers.
The US has typically charged lower tariffs on goods than other countries, which means his reciprocal plan could lead to a sudden and sharp increase in the tax rates - and to the prices people pay at checkout. The US has typically charged lower tariffs on goods than other countries.
Markets sink as Trump confirms tariffs on Canada, Mexico and China Trump's new tariffs - and his promise to introduce further "reciprocal" levies on goods from other countries - could lead to a sharp increase in the prices people pay for goods in the US and around the globe.
Trump will 'probably' cut Mexico and Canada tariffs - US commerce chief
BBC reporters answer your tariff questionsBBC reporters answer your tariff questions
European stocks steady after US markets plunge
Why is Trump using tariffs?Why is Trump using tariffs?
Tariffs are a central part of Trump's economic plans. He says tariffs will boost US manufacturing and protect jobs, as well as raising tax revenue and growing the economy.Tariffs are a central part of Trump's economic plans. He says tariffs will boost US manufacturing and protect jobs, as well as raising tax revenue and growing the economy.
Goods from China, Mexico and Canada accounted for more than 40% of imports into the US in 2024.Goods from China, Mexico and Canada accounted for more than 40% of imports into the US in 2024.
When he first announced plans for new tariffs, the White House said the president was "taking bold action to hold [the three countries] accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country". But Trump has accused the three countries of not doing enough to end the flow of migrants and illegal drugs such as fentanyl into the US.
All three countries have rejected the accusations.
Fentanyl is linked to tens of thousands of overdose deaths in the US each year.Fentanyl is linked to tens of thousands of overdose deaths in the US each year.
The Trump administration says the chemicals come from China, while Mexican gangs supply it illegally and run fentanyl labs in Canada. Outgoing Canadian Prime Minister Justin Trudeau said his country was responsible for less than 1% of fentanyl entering the US, most of which comes from Mexico.
Canadian Prime Minister Justin Trudeau said his country was responsible for less than 1% of fentanyl entering the US, most of which comes from Mexico.
How Japan sparked Trump's 40-year love affair with tariffsHow Japan sparked Trump's 40-year love affair with tariffs
Faisal Islam: The tariff wars have begun - buckle upFaisal Islam: The tariff wars have begun - buckle up
Trump's tariffs risk economic turbulence - and voter backlashTrump's tariffs risk economic turbulence - and voter backlash
Watch: What is a tariff? The BBC's Adam Fleming explains What is happening with tariffs against Canada and Mexico?
Trump has introduced 25% tariffs on goods from both US neighbours, Canada and Mexico.
These were originally due to start on 4 February but were delayed for a month to allow further negotiations. The 25% tariffs began on 4 March, with a 10% tariff on Canadian energy imports.
On 5 March, Trump announced a month-long tariff exemption for cars made in North America which comply with the continent's existing free trade agreement, the US-Mexico-Canada agreement (USMCA).
That deal, which was negotiated by Trump during his first term in office, sets out rules for how much of a car must be made in each country to qualify for duty-free treatment.
The Canadian and Mexican tariffs had prompted fears of significant impacts on car manufacturing.
Component parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.
Shares in leading US carmakers rose after the announcement.
On 6 March Trump expanded the tariff exemption to include other goods shipped under the USMCA.
Items currently covered by the pact's rules include televisions, air conditioners, avocados and beef, according to analysis by the firm Trade Partnership Worldwide.
Trump also reduced tariffs on potash - a key ingredient for fertiliser used by US farmers - from 25% to 10%.
A White House official said about 50% of US imports from Mexico and 62% from Canada may still face tariffs, although those figures could change.
How has Canada responded to US tariffs?
When they were first introduced, the outgoing Prime Minister Justin Trudeau criticised the tariffs as a "very dumb thing to do".
He accused Trump of planning "a total collapse of the Canadian economy [to] make it easier to annex us".
He said Canada would immediately target C$30bn ($21bn; £16bn) worth of US imports, and goods worth a further C$125bn in 21 days.
After Trump excluded more Canadian goods from the tariffs, Finance Minister Dominic LeBlanc said the country would delay the second round of its retaliatory taxes.
However, Trudeau told reporters that a trade war between the two allies remained likely for the foreseeable future.
His replacement - the incoming Prime Minister Mark Carney - has strongly criticised Trump's "unjustified tariffs", and vowed that "in trade, as in hockey, Canada will win."
Meanwhile, Ontario Premier Doug Ford said he would go ahead with a planned 25% surcharge on Canadian electricity exports to three US states: Michigan, New York and Minnesota.
Ford previously said he would consider completely cutting those states off from Canadian power if the US tariffs escalated.
Canada hits US with retaliatory tariffs after warning of 'existential threat'
How has Mexico responded to the US tariffs?
Mexico also delayed retaliatory tariffs on US goods during the initial month-long pause.
President Claudia Sheinbaum urged Mexicans to "remain calm" over Trump, insisting that "cooler heads will prevail."
She also agreed to deploy 10,000 troops to the US-Mexico border to help tackle smuggling.
Speaking after the tariffs came into force on 4 March, she said the US decision had "no justification", and promised to respond with "tariff and non-tariff measures".
However, before these were set out, Trump announced the concessions for carmakers and other goods, which she welcomed.
While Trump has been very critical of his Canadian counterpart Trudeau, he has praised Sheinbaum, writing on his social media site, Truth Social, that "our relationship has been a very good one and we are working hard, together, on the border."
As the US and Canada trade barbs, it's so far so good for Mexico's Sheinbaum
How will the steel and aluminum tariffs work?
The US imports more steel than any other country - and Canada, Brazil and Mexico are its top three suppliers.
Canada is also the largest supplier of aluminum to the US, providing almost 60% of the amount imported.
When Trump first announced that a 25% tariff on steel and aluminium imports would start on 12 March, he said there would be no exceptions.
When he announced that this levy would be doubled for metals coming from Canada on on 11 March, he said it was because of that country's decision to charge US energy customers more.
Writing on Truth Social, he said: "Based on Ontario, Canada, placing a 25% Tariff on 'Electricity' coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff."
American companies that use steel and aluminium to make products have warned the tariffs could push their prices up.
Trump previously announced tariffs of 25% on steel and 10% on aluminium in 2018, during his first term as president.
However, he later negotiated exceptions for many countries including Australia, Canada and Mexico.
Despite those previous exemptions, tariffs raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.
Three American goods that could rise in price due to metal tariffs
What is happening with tariffs against China?What is happening with tariffs against China?
A 10% charge on all goods imported from China started on 4 February.A 10% charge on all goods imported from China started on 4 February.
Trump later said shipments worth less than $800 would be exempt.Trump later said shipments worth less than $800 would be exempt.
On 10 February, China responded with its own tariffs, including a 10-15% tax on some US agricultural goods.On 10 February, China responded with its own tariffs, including a 10-15% tax on some US agricultural goods.
Beijing has also targeted various US aviation, defence and tech firms by adding them to an "unreliable entity list" and imposing export controls.Beijing has also targeted various US aviation, defence and tech firms by adding them to an "unreliable entity list" and imposing export controls.
The 10% levy doubled to 20% on 4 March.The 10% levy doubled to 20% on 4 March.
China urged the US to return to dialogue with Beijing as soon as possible.China urged the US to return to dialogue with Beijing as soon as possible.
"If the United States... persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end," foreign ministry spokesman Lin Jian warned."If the United States... persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end," foreign ministry spokesman Lin Jian warned.
China says it is ready for 'any type of war' with USChina says it is ready for 'any type of war' with US
Can Trump's tariffs break China's grip on manufacturing?Can Trump's tariffs break China's grip on manufacturing?
What is happening with tariffs against Canada?
Trump has introduced 25% tariffs on goods from both US neighbours, Canada and Mexico. These were originally due to begin on 4 February but finally started on 4 March.
Meanwhile, Canadian energy imports face a 10% tariff.
Trump had previously said the month-long delay would let the US see "whether or not a final economic deal with Canada" could be reached.
Prime Minister Justin Trudeau criticised the tariffs as a "very dumb thing to do", and accused Trump of planning "a total collapse of the Canadian economy because that will make it easier to annex us".
He said his country would immediately target C$30bn worth of products entering from the US, and goods worth a further C$125bn in 21 days.
Canada may also restrict US access to its energy. It is the top oil supplier to the US and also provides some electricity to 30% of the states.
Ontario Premier Doug Ford said he would implement his own 25% surcharge on Canadian electricity exports to three US states: Michigan, New York and Minnesota.
And he said he would consider completely cutting those states off from Canadian power if the US tariffs escalated.
Canada hits US with retaliatory tariffs after warning of 'existential threat'
What is happening with tariffs against Mexico?
Mexico also delayed retaliatory tariffs on US goods after the initial US pause.
President Claudia Sheinbaum agreed to send 10,000 members of the National Guard to the US-Mexican border to "prevent the trafficking of drugs, in particular fentanyl".
She said the US had in turn agreed to increase measures to prevent the trafficking of high-powered American weapons into Mexico.
Speaking after Trump's tariffs came into force on 4 March, Sheinbaum said the US's decision to go ahead with 25% levies had "no justification" - adding that Mexico wanted respect from its northern neighbour.
Mexico will impose "tariff and non-tariff measures" in response, she added, and promised to set out further details on 9 March.
How will the carmakers' exemption work?
The month-long tariff exemption is for cars made in North America that comply with the continent's existing free trade agreement.
That deal, which was negotiated by Trump during his first term in office, sets out rules for how much of a car must be made in each country to qualify for duty-free treatment.
The Canadian and Mexican tariffs prompted fears of significant impacts on car manufacturing. Component parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.
The average US car price could increase by $3,000 because of the import taxes, financial analyst TD Economics suggested.
Shares in Ford were up by more than 5% after the announcement, while General Motors shares rose more than 7%.
How will the steel and aluminum tariffs work?
Trump said the 25% tariff on both metals will come into effect on 12 March, with no exceptions.
The US is the world's largest importer of steel, with Canada, Brazil and Mexico its top three suppliers.
Canada also provided more than 50% of the aluminium imported into the US in 2024.
American companies that use steel and aluminium to make products have warned the tariffs could push their prices up.
The Canadian government said the tariffs were "totally unjustified" and vowed swift retaliation.
Trump previously announced tariffs of 25% on steel and 15% on aluminium in 2018, during his first term as president. However, he later negotiated exceptions for many countries including Australia, Canada and Mexico.
Despite the exemptions, tariffs raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.
Three American goods that could rise in price due to metal tariffs
Which products will be affected and will prices increase?Which products will be affected and will prices increase?
All goods from China worth more than $800 are covered by the tariff. All goods from China worth more than $800 are covered by the 20% tariff.
All steel imports from around the world face a 25% tax. Non-exempt goods imported from Mexican and Canada are subject to a 25% levy.
Mexican and Canadian goods will also be subject to a 25% levy. A 10% tariff has been added to Canadian energy exports. Canadian energy exports to the US face a 10% tariff, which could affect a broad range of businesses.
Goods from Mexico that could be affected include fruit, vegetables, spirits and beer. Steel and aluminium imports from Canada will be taxed at 50%, while those from the rest of the world will be taxed at 25%.
In addition to steel, Canadian goods such as timber, grains and potatoes are also likely to get more expensive.
An increase in the cost of Canadian oil and electricity could push up prices across the board.
US tariffs on imported washing machines between 2018 and 2023 increased the price of laundry equipment by 34%, according to official statistics. Prices fell once the tariffs expired.US tariffs on imported washing machines between 2018 and 2023 increased the price of laundry equipment by 34%, according to official statistics. Prices fell once the tariffs expired.
The Federal Reserve of Atlanta has estimated that the Mexico and Canada tariffs, combined with adding another 10% tariff on Chinese goods, could raise prices on everyday purchases by 0.81% to 1.63%. Many economists have warned that Trump's latest round of tariffs could prompt a wider trade war that could put prices up more generally.
Some experts suggest that Trump's new round of tariffs could prompt a wider trade war that could put prices up more generally.
Capitol Economics said the annual rate of US inflation could increase from 2.9% to as high as 4%.
Six things that could get more expensive for Americans under Trump tariffsSix things that could get more expensive for Americans under Trump tariffs
Toymakers warn of price risesToymakers warn of price rises
Trump tariffs could be good for some countries, including the UKTrump tariffs could be good for some countries, including the UK
Will the UK and Europe have to pay tariffs?Will the UK and Europe have to pay tariffs?
Trump previously told the BBC the UK was "out of line", but suggested a solution could be "worked out".Trump previously told the BBC the UK was "out of line", but suggested a solution could be "worked out".
The UK exports pharmaceutical products, cars and scientific instruments to the US.The UK exports pharmaceutical products, cars and scientific instruments to the US.
Business Secretary Jonathan Reynolds said the UK should be excluded from tariffs because it buys more from the US than it sells there.Business Secretary Jonathan Reynolds said the UK should be excluded from tariffs because it buys more from the US than it sells there.
Speaking in Parliament after the announcement of the steel and aluminium tariffs, Trade Minister Douglas Alexander promised a "cool and clear-headed" response.Speaking in Parliament after the announcement of the steel and aluminium tariffs, Trade Minister Douglas Alexander promised a "cool and clear-headed" response.
During his 26 February cabinet meeting, Trump said he would announce sanctions on EU goods "very soon".During his 26 February cabinet meeting, Trump said he would announce sanctions on EU goods "very soon".
"It'll be 25% generally speaking and that will be on cars and all other things," he added."It'll be 25% generally speaking and that will be on cars and all other things," he added.
The US had a trade deficit of $213bn with the EU in 2024 - something Trump has previously described as "an atrocity".The US had a trade deficit of $213bn with the EU in 2024 - something Trump has previously described as "an atrocity".
In response, the European Commission said it would react "firmly and immediately against unjustified tariffs".In response, the European Commission said it would react "firmly and immediately against unjustified tariffs".
US companies Harley Davidson and Jack Daniel's have previously faced EU tariffs.US companies Harley Davidson and Jack Daniel's have previously faced EU tariffs.