What are tariffs and who pays for them?
Donald Trump ignited a global trade war after imposing tariffs between 10-50 per cent on a swathe of countries.
Hailing April 2 as 'liberation day', the US president promised to implement a range of fresh tariffs on America's trading partners, upending the global markets.
But what are tariffs – and what impact will they have?
What are reciprocal tariffs?
Why has Trump imposed tariffs?
Who pays tariffs?
What does the UK export to the US?
What are reciprocal tariffs?
A tariff is a tax imposed by one country on goods imported from others. In addition to being the world's largest economy, the US is also the leading global importer, pulling in $3.2 trillion (£2.5 trillion) worth of goods in 2023.
Tariffs are collected by the customs authority of the country that imposes the levy. In the US, they're paid to the Customs and Border Protection agency at ports of entry across the country. In the UK, it's HM Revenue & Customs.
Speaking in the White House Rose Garden on April 2, Donald Trump said: 'Today, we're standing up for the American worker, and we are finally putting America first.
'Reciprocal, that means they do it to us and we do it to them. Very simple.'
Why has Trump imposed tariffs?
Tariffs are often used to protect domestic industries. For example, in 2024 the EU imposed taxes on Chinese electric vehicles amid concerns that European car manufacturers were under threat from cut-price Chinese rivals.
But they are also used as a political weapon. Trump has said the 'liberation day' tariffs are in response to illegal immigration and the flow of drugs over the US border.
The US president set the lowest level of levies on the UK, announcing tariffs of 10 per cent on Britain as part of a 'declaration of economic independence' by the US.
By contrast, China has been hit with tariffs of 34 per cent and imports from the European Union face a 20 per cent levy.
Who pays tariffs?
Mr Trump has frequently portrayed tariffs as a tax on foreign countries, but this isn't true. It is the importer – in this case, American companies importing foreign goods affected by tariffs – who pays the levy. They typically pass these additional costs on to customers, meaning US consumers are likely to bear the brunt.
That said, tariffs can harm foreign companies as their products become more expensive, potentially damaging sales. Exporters sometimes cut their prices to offset the impact of tariffs, helping to maintain market share but denting their profit margins.
What does the UK export to the US?
British steel exports to the US in 2024 were on track to hit 178,000 tonnes, worth £364m and nearly a tenth (9pc) of all UK steel exports, making it the country's second-largest market after the EU, according to industry data.
Gareth Stace, the director general of UK Steel, described the tariffs as a 'devastating blow to our industry'.
The UK sold £58.7bn worth of goods to the US last year, making America the largest export market for British goods, excluding the EU. 16.1pc of all items sold abroad went across the pond.
Aston Martins and Scotch whisky are likely to become more expensive in the US under Donald Trump.
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