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Yahoo
03-04-2025
- Business
- Yahoo
What to know about President Donald Trump's vast array of tariffs
In announcing what he has called reciprocal tariffs, Trump was fulfilling a key campaign promise by raising US taxes on foreign goods to narrow the gap with the tariffs the White House says other countries unfairly impose on US products. Trump's higher rates would hit foreign entities that sell more goods to the United States than they buy. But economists don't share Trump's enthusiasm for tariffs—notably because they're a tax on importers that usually get passed on to consumers. It's possible, however, that the reciprocal tariffs could bring other countries to the table and get them to lower their own import taxes. Tariffs are taxes on imports, collected when foreign goods cross the US border by the Customs and Border Protection agency. The money — about $80 billion (€72bn) last year — goes to the US Treasury to help pay the federal government's expenses. Congress has authority to say how the money will be spent. Trump — largely supported by Republican lawmakers who control the US Senate and House of Representatives — wants to use increased tariff revenue to finance tax cuts that analysts say would disproportionately benefit the wealthy. Specifically, they want to extend tax cuts passed in Trump's first term, largely set to expire at the end of 2025. The Tax Foundation, a nonpartisan think tank in Washington, has found that extending Trump's tax cuts would reduce federal revenue by $4.5 trillion (€4.1tn) from 2025 to 2034. Trump wants higher tariffs to help offset the lower tax collections. Another think tank, the Tax Policy Center, has said that extending the 2017 tax cuts would deliver continued tax relief to Americans at all income levels, 'but higher-income households would receive a larger benefit''. It depends on how businesses both in the United States and overseas respond, but consumers could see overall prices rising within a month or two of tariffs being imposed. For some products, such as produce from Mexico, prices could rise much more quickly after the tariffs take effect. Some US retailers and other importers may absorb part of the cost of the tariff, and overseas exporters may reduce their prices to offset the extra duties. But for many businesses, the tariffs Trump announced Wednesday — such as 20% on imports from Europe — will be too large to swallow on their own. Related Here's why President Trump's tariffs could benefit European consumers 'Major economic blow': EU and world leaders react to Trump's tariffs Companies may also use the tariffs as an excuse to raise prices. When Trump slapped duties on washing machines in 2018, studies later showed that retailers raised prices on both washers and dryers, even though there were no new duties on dryers. A key question in the coming months is whether something similar will happen again. Economists worry that consumers, having just lived through the biggest inflationary spike in four decades, are more accustomed to rising prices than they were before the pandemic. Yet there are also signs that Americans, put off by the rise in the cost of living, are less willing to accept price increases and will simply cut back on their purchases. That could discourage businesses from raising prices by much. The US Constitution grants the power to set tariffs to Congress. But over the years, Congress has delegated those powers to the president through several different laws. Those laws specify the circumstances under which the White House can impose tariffs, which are typically limited to cases where imports threaten national security or are severely harming a specific industry. In the past, presidents generally imposed tariffs only after carrying out public hearings to determine if certain imports met those criteria. Trump followed those steps when imposing tariffs in his first term. In his second term, however, Trump has sought to use emergency powers set out in a 1977 law to impose tariffs in a more ad hoc fashion. Trump has said, for example, that fentanyl flowing in from Canada and Mexico constitute a national emergency and has used that pretext to impose 25% duties on goods from both countries. Congress can seek to cancel an emergency that a president declares, and Senator Tim Kaine, a Democrat from Virginia, has proposed to do just that regarding Canada. That legislation could pass the Senate but would likely die in the House. Other bills in Congress that would also limit the president's authority to set tariffs face tough odds for passage as well. US tariffs are generally lower than those charged by other countries. The average US tariff, weighted to reflect goods that are actually traded, is just 2.2% for the United States, versus the European Union's 2.7%, China's 3% and India's 12%, according to the World Trade Organization. Other countries also tend to do more than the United States to protect their farmers with high tariffs. The US trade-weighted tariff on farm goods, for example, is 4%, compared to the EU's 8.4%, Japan's 12.6%, China's 13.1% and India's 65%. The WTO numbers don't count Trump's recent flurry of import taxes or tariffs between countries that have entered into their own free trade agreements, such as the US-Mexico-Canada Agreement that allows many goods to cross North American borders duty-free. Yet the Trump administration has used its own calculations to come up with far greater tariffs that they say other economies impose on the US. For example, the White House said Wednesday that the European Union's effective tariffs on the US equal 39%, far higher than the WTO's numbers. It says China's tariffs equal 67%. Previous US administrations agreed to the tariffs that Trump now calls unjust. They were the result of a long negotiation between 1986 to 1994 — the so-called Uruguay Round — that ended in a trade pact signed by 123 countries, forming the basis of the global trading system for nearly four decades.
Chicago Tribune
03-04-2025
- Business
- Chicago Tribune
What to know about President Donald Trump's vast new tariffs
WASHINGTON — After weeks of anticipation and speculation, President Donald Trump followed through on his tariff threats by declaring on Wednesday a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States. In announcing what he has called reciprocal tariffs, Trump was fulfilling a key campaign promise by raising U.S. taxes on foreign goods to narrow the gap with the tariffs the White House says other countries unfairly impose on U.S. products. Trump's higher rates would hit foreign entities that sell more goods to the United States than they buy. But economists don't share Trump's enthusiasm for tariffs since they're a tax on importers that usually get passed on to consumers. It's possible, however, that the reciprocal tariffs could bring other countries to the table and get them to lower their own import taxes. The Associated Press asked for your questions about reciprocal tariffs. Here are a few of them, along with our answers: Do US-collected tariffs go into the General Revenue Fund? Can Trump withdraw money from that fund without oversight? Tariffs are taxes on imports, collected when foreign goods cross the U.S. border by the Customs and Border Protection agency. The money — about $80 billion last year — goes to the U.S. Treasury to help pay the federal government's expenses. Congress has authority to say how the money will be spent. Trump — largely supported by Republican lawmakers who control the U.S. Senate and House of Representatives — wants to use increased tariff revenue to finance tax cuts that analysts say would disproportionately benefit the wealthy. Specifically, they want to extend tax cuts passed in Trump's first term and largely set to expire at the end of 2025. The Tax Foundation, a nonpartisan think tank in Washington, has found that extending Trump's tax cuts would reduce federal revenue by $4.5 trillion from 2025 to 2034. Trump wants higher tariffs to help offset the lower tax collections. Another think tank, the Tax Policy Center, has said that extending the 2017 tax cuts would deliver continued tax relief to Americans at all income levels, 'but higher-income households would receive a larger benefit.'' How soon will prices rise as a result of the tariff policy? It depends on how businesses both in the United States and overseas respond, but consumers could see overall prices rising within a month or two of tariffs being imposed. For some products, such as produce from Mexico, prices could rise much more quickly after the tariffs take effect. Some U.S. retailers and other importers may eat part of the cost of the tariff, and overseas exporters may reduce their prices to offset the extra duties. But for many businesses, the tariffs Trump announced Wednesday — such as 20% on imports from Europe — will be too large to swallow on their own. Companies may also use the tariffs as an excuse to raise prices. When Trump slapped duties on washing machines in 2018, studies later showed that retailers raised prices on both washers and dryers, even though there were no new duties on dryers. A key question in the coming months is whether something similar will happen again. Economists worry that consumers, having just lived through the biggest inflationary spike in four decades, are more accustomed to rising prices than they were before the pandemic. Yet there are also signs that Americans, put off by the rise in the cost of living, are less willing to accept price increases and will simply cut back on their purchases. That could discourage businesses from raising prices by much. What is the limit of the executive branch's power to implement tariffs? Does Congress not play any role? The U.S. Constitution grants the power to set tariffs to Congress. But over the years, Congress has delegated those powers to the president through several different laws. Those laws specify the circumstances under which the White House can impose tariffs, which are typically limited to cases where imports threaten national security or are severely harming a specific industry. In the past, presidents generally imposed tariffs only after carrying out public hearings to determine if certain imports met those criteria. Trump followed those steps when imposing tariffs in his first term. In his second term, however, Trump has sought to use emergency powers set out in a 1977 law to impose tariffs in a more ad hoc fashion. Trump has said, for example, that fentanyl flowing in from Canada and Mexico constitute a national emergency and has used that pretext to impose 25% duties on goods from both countries. Congress can seek to cancel an emergency that a president declares, and Sen. Tim Kaine, a Democrat from Virginia, has proposed to do just that regarding Canada. That legislation could pass the Senate but would likely die in the House. Other bills in Congress that would also limit the president's authority to set tariffs face tough odds for passage as well. What tariffs are other countries charging on US goods? U.S. tariffs are generally lower than those charged by other countries. The average U.S. tariff, weighted to reflect goods that are actually traded, is just 2.2% for the United States, versus the European Union's 2.7%, China's 3% and India's 12%, according to the World Trade Organization. Other countries also tend to do more than the United States to protect their farmers with high tariffs. The U.S. trade-weighted tariff on farm goods, for example, is 4%, compared to the EU's 8.4%, Japan's 12.6%, China's 13.1% and India's 65%. (The WTO numbers don't count Trump's recent flurry of import taxes or tariffs between countries that have entered into their own free trade agreements, such as the U.S.-Mexico-Canada Agreement that allows many goods to cross North American borders duty-free.) Yet the Trump administration has used its own calculations to come up with far greater tariffs that they say other economies impose on the U.S. For example, the White House said Wednesday that the European Union's effective tariffs on the U.S. equal 39%, far higher than the WTO's numbers. It says China's equal 67%. Previous U.S. administrations agreed to the tariffs that Trump now calls unjust. They were the result of a long negotiation between 1986 to 1994 — the so-called Uruguay Round — that ended in a trade pact signed by 123 countries and has formed the basis of the global trading system for nearly four decades.
Yahoo
03-04-2025
- Business
- Yahoo
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? 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.' 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. 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. 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. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
03-04-2025
- Business
- Telegraph
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.
Telegraph
13-03-2025
- Business
- Telegraph
What are Trump's tariffs and how will they affect the UK?
Donald Trump has ignited a global trade war after imposing tariffs on some of the US's closest allies. The US president has imposed 25pc levies on Mexican and Canadian goods, having already added an additional tariff on goods imported from China. Trump has also slapped higher tariffs on steel and aluminium imports, in a measure that UK producers say will prove a 'devastating blow'. In February, he announced plans to impose reciprocal tariffs on US trading partners, but these are not expected to come into force until April. Further action is expected against the European Union, while it remains unclear whether Britain will be directly targeted. Trump's proclamations on tariffs have been vague and often changeable, with threats repeatedly made and then rolled back. The uncertainty has sparked turmoil in global markets. But what are tariffs – and what impact will they have? What are tariffs? What tariffs has Trump imposed? Why has Trump imposed tariffs? Who pays the tariffs? How will Trump's tariffs affect Americans? What does the UK export to the US? What are retaliatory tariffs? What reciprocal tariffs has the president announced? What are tariffs and how do they work? 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. What tariffs has Trump imposed? Trump, who has long raised the prospect of new tariffs, signed an executive order imposing fresh tariffs on Feb 2. The US has doubled the levy on Chinese goods to 20pc. After a delay of a month, the US president implemented a 25pc duty on goods from Mexico and Canada, with Canadian oil hit by a lower 10pc levy. Just two days later, and following a backlash from car manufacturers including Ford, General Motors and Stellantis, Trump granted a reprieve exempting a significant number of Canadian and Mexican goods from the tariffs until April 2. Justin Trudeau, the former Canadian prime minister, said he had had a 'colourful' phone call with Trump about the tariffs, with the US president reportedly using profane language. Trump has separately imposed 25pc tariffs on all imports of steel and aluminium, extending a 10pc levy he previously imposed in 2018. The president briefly threatened to escalate his trade war with Canada by doubling these metal tariffs to 50pc, but quickly rowed back on the threat.
