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What are tariffs and will prices rise? What are tariffs and why is Trump threatening to use them?
(about 16 hours later)
Watch: What is a tariff? The BBC's Adam Fleming explainsWatch: What is a tariff? The BBC's Adam Fleming explains
Donald Trump has agreed to pause imposing tariffs on goods from Mexico and Canada, after threatening to bring them in from Tuesday. President Trump has introduced tariffs on goods from China, which has hit back by announcing similar charges on some US products.
The US president had said tariffs were needed to "protect" Americans from the "major threat of illegal aliens and deadly drugs", including fentanyl, but will now delay implementing them after calls on Monday with Canadian Prime Minister Justin Trudeau and Mexican PM Claudia Sheinbaum. Trump has also threatened to introduce tariffs - a tax on imports - on goods from Canada and Mexico, but paused these for 30 days after both countries agreed to boost border security.
The US president has said tariffs are needed to help the American economy and to "protect" the country from the "major threat of illegal aliens and deadly drugs".
Trump told the BBC tariffs on EU goods could happen "pretty soon" - but suggested a deal could be "worked out" with the UK.Trump told the BBC tariffs on EU goods could happen "pretty soon" - but suggested a deal could be "worked out" with the UK.
He also floated the idea of an additional 10% across-the-board tariff on all goods imported into the US.
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.
Trump originally said he would impose a 25% tariff on goods shipped from Canada and Mexico. So, a product worth $4 would face an additional $1 charge applied to it. Trump introduced a 10% tariff on all goods from China. So, a product worth $10 would have an additional $1 charge applied to it.
There will be a 10% charge on goods imported from China, set to take effect on 4 February at 00:01 EDT (05:01 GMT), he said. The president originally said he would impose a 25% tariff on goods from Canada and Mexico.
However, Trudeau confirmed Trump's proposed tariffs of 25% on Canadian goods - which was also set to come into effect on Tuesday - "will be paused for at least 30 days while we work together". Charging a percentage of a product's value is the most common type of tariff. Another type imposes a fixed figure on imports, whatever their value.
In a post on X, Trudeau said Canada is implementing a "$1.3bn border plan" to add "new choppers, technology and personnel to border," as well as "increased resources to stop the flow of fentanyl". Companies that import goods from abroad pay the tariffs to the US government.
Trump confirmed the charges would be halted for 30 days to see "whether or not a final Economic deal with Canada can be structured." Why is Trump using tariffs?
The proposed tariffs against Mexico have also been delayed a month after the two countries struck a deal after a phone call between Trump and Mexican President Claudia Sheinbaum.
This type of tariff - charging a percentage of a product's value - is most common. Another type of tariff imposes a fixed figure on imports, whatever their value.
Companies that import goods from abroad pay the tariffs to the US government. However, economists say these additional costs are usually passed on to the consumer through higher prices.
Why did Trump threaten tariffs on Canada, Mexico and China?
Trump is fulfilling a campaign promise of introducing import duties against some of America's closest trading partners.Trump is fulfilling a campaign promise of introducing import duties against some of America's closest trading partners.
Trump said this will boost US manufacturing. The tariffs will boost US manufacturing, protect jobs, raise tax revenue and grow the economy, he argues.
The tariffs will grow the US economy, protect jobs, and raise tax revenue, he argues. Trump says he is also using tariffs to "combat the scourge of fentanyl", a powerful drug that causes tens of thousands of overdose deaths in the US each year.
Trump says he is using tariffs not just for economic reasons, but also to "combat the scourge of fentanyl", a powerful drug that causes tens of thousands of overdose deaths in the US each year. His administration says chemicals used to make the drug come from China, while Mexican gangs supply it illegally and have fentanyl labs in Canada.
His administration says chemicals used to make the drug come from China, while Mexican gangs supply it illegally and have fentanyl labs in Canada. Trudeau has said less than 1% of fentanyl entering the US comes from his country. Canadian Prime Minister Justin Trudeau has said less than 1% of fentanyl entering the US comes from his country.
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At the same time Trump is placing economic pressure on these trading partners, he has stated a desire for Canada to join America as the 51st state, an idea Trudeau has firmly rejected.At the same time Trump is placing economic pressure on these trading partners, he has stated a desire for Canada to join America as the 51st state, an idea Trudeau has firmly rejected.
In response to Trump's initial announcement, Trudeau declared retaliatory 25% tariffs on 155bn Canadian dollars' worth ($107bn; £86bn) of US goods on Saturday.
Following a call with Trump on Monday, he also halted the tariffs.
Mexican President Claudia Sheinbaum had earlier directed the Secretary of Economy to impose a plan including "tariff and non-tariff measures in defence of Mexico's interests".
In a statement, China's foreign ministry said in a statement that it "firmly deplores and opposes this move" and will "take necessary countermeasures".
"Trade and tariff wars have no winners," said a spokesperson at China's Washington embassy.
Together, China, Mexico and Canada accounted for more than 40% of imports into the US last year.Together, China, Mexico and Canada accounted for more than 40% of imports into the US last year.
What is happening with China, Canada and Mexico?
China
A 10% charge on all goods imported from China to the US took effect on 4 February.
In response, China said it will implement a 15% tariff on US coal and liquefied natural gas products from 10 February. Crude oil, agricultural machinery and large engine cars will see a 10% tariff.
"Trade and tariff wars have no winners," said a spokesperson at China's Washington embassy.
Canada
Canadian Prime Minister Justin Trudeau said Trump's proposed tariffs of 25% on Canadian goods - which were also set to begin on Tuesday - "will be paused for at least 30 days while we work together".
Trudeau's retaliatory 25% tariffs on 155bn Canadian dollars' worth ($107bn; £86bn) of US imports were also halted.
In exchange for the pause, Trudeau said Canada was implementing a "$1.3bn border plan" to add "new choppers, technology and personnel to border," as well as "increased resources to stop the flow of fentanyl".
Much of the border security plan had already been announced in December.
Trump said the delay would allow the US to see "whether or not a final economic deal with Canada" can be reached.
Mexico
The proposed 25% tariffs against Mexico have also been delayed a month, as have measures by Mexico against US goods.
Mexico's 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".
President Sheinbaum said the US had in turn agreed to increase measures to prevent the trafficking of high-powered US weapons into Mexico.
Which products will be affected?Which products will be affected?
In Trump's previous time in office, he applied less restrictive tariffs on China. During Trump's previous time in office, he applied less restrictive tariffs on China. This time around, the tariffs appear to apply to all goods from China.
This time around, the tariffs appear to apply to most categories of goods. Should the measures against goods from Mexico and Canada ultimately go ahead, a range of items are expected to become more expensive
There is, however, a carve-out for Canadian energy, which will be tariffed at 10% instead of 25%, should the charge go ahead after 30 days. Car manufacturing could bear the brunt of the effects of tariffs.
Goods from Mexico such as fruit, vegetables, spirits and beer are expected to get more expensive should the tariffs ultimately take effect.
Canadian goods such as steel, lumber, grains and potatoes would also be likely to get pricier.
It is expected the car manufacturing sector could see the brunt of the effects of potential tariffs.
Vehicle parts cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.Vehicle parts 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.The average US car price could increase by $3,000 because of the import taxes, financial analyst TD economics suggested.
Other goods from Mexico which could be affected include fruit, vegetables, spirits and beer.
Canadian goods such as steel, lumber, grains and potatoes would also be likely to get pricier.
Canadian energy would be tariffed at 10% instead of 25%.
Will the UK and Europe have to pay tariffs?Will the UK and Europe have to pay tariffs?
On Sunday, Trump told the BBC the UK was acting "out of line", but suggested a solution for the UK could be "worked out" as he was "getting along very well" with UK Prime Minister Keir Starmer. On Sunday, Trump told the BBC the UK was acting "out of line", but suggested a solution for the UK could be "worked out".
But, he said tariffs could be imposed on the EU "pretty soon", saying "they take almost nothing [from the US] and we take everything from them".But, he said tariffs could be imposed on the EU "pretty soon", saying "they take almost nothing [from the US] and we take everything from them".
The UK's Business Secretary, Jonathan Reynolds, has said that he thinks the UK should be excluded from any tariffs because the US currently exports more products to the UK than it imports from the US. The UK's business secretary, Jonathan Reynolds, said the UK should be excluded from tariffs because the US exports more products to the UK than it imports.
"I think we've got an argument to engage with," Reynolds told the BBC.
The UK exports pharmaceutical products, cars and scientific instruments to the US.The UK exports pharmaceutical products, cars and scientific instruments to the US.
Last year, the US had a trade deficit of $213bn with the EU - which Trump described as "an atrocity".Last year, the US had a trade deficit of $213bn with the EU - which Trump described as "an atrocity".
The EU has said it would "respond firmly" to any tariffs.The EU has said it would "respond firmly" to any tariffs.
EU foreign policy chief Kaja Kallas said a trade war with the US would mean "the one laughing on the side is China", adding: "We need America, and America needs us as well." US companies Harley Davidson, which manufactures motorcycles, and whiskey distilleries such as Jack Daniel's have previously faced EU tariffs.
US companies Harley Davidson, which manufactures motorcycles, and whiskey distilleries such as Jack Daniel's have previously faced tariffs from the EU.
Do tariffs cause inflation?Do tariffs cause inflation?
Economists suggest that a portion of the cost of tariffs ends up being paid by consumers.Economists suggest that a portion of the cost of tariffs ends up being paid by consumers.
Sellers may raise the price of goods they are importing for consumers. Sellers may raise the price of goods they are importing.
Economic studies of the impacts of tariffs imposed by Trump during his first term in office show the burden was ultimately borne by US consumers. From 2018 to 2023, tariffs on imported washing machines saw the price of laundry equipment rise by 34%, according to official statistics, before falling once the tariffs expired.
From 2018 to 2023, tariffs on imported washing machines saw the price of laundry equipment rise by 34% in the US, according to official statistics, before falling once the tariffs expired.
Some experts suggest that these new tariffs could prompt a wider trade war and exacerbate inflation.Some experts suggest that these new tariffs could prompt a wider trade war and exacerbate inflation.
Capitol Economics said the annual rate of inflation could increase from 2.9% to as high as 4% because of the newly announced tariffs.Capitol Economics said the annual rate of inflation could increase from 2.9% to as high as 4% because of the newly announced tariffs.
If that happens, US inflation would return to the levels seen in mid-2023.