Donald Trump’s tariffs: What’s going on and what does it all mean?

Published

3 hours ago

February 3, 2025

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Donald Trump has ordered sweeping tariffs on Mexico, Canada and China, kicking off a trade war that will affect the globe.

Here we look at the tariffs and what they all mean for the world:

What did Trump announce?

The US president has confirmed that goods from Mexico and Canada will face 25% tariffs, while 10% taxes will be implemented on imports from China.

Canadian energy, including oil, natural gas and electricity, will be taxed at a 10% rate.

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The levies are expected to all take effect on Tuesday, with Mexico and Canada both announcing counter-tariffs of their own in response.

Mr Trump has also threatened to go further, saying tariffs on the European Union would be implemented “pretty soon”.

When questioned about the UK, the president said Britain was “out of line” when it came to trade but he thought the situation could be “worked out” without the use of tariffs.

What are tariffs, and how do they work?

Put simply, tariffs are taxes on goods that are brought in from other countries.

By raising the price of imports, tariffs aim to protect domestic manufacturers by making locally made goods cheaper.

Contrary to what Mr Trump has said, it is not foreign countries that pay tariffs, but the importing companies that buy the goods.

For example, American businesses like Walmart or Target pay tariffs directly to the US treasury.

In the US, these tariffs are collected by customs and border protection agents, who are stationed at 328 ports of entry across the country.

To compensate for tariffs, companies then put up their prices, so customers end up paying more for goods.

Tariffs can also damage foreign countries as it makes their products pricier and harder to sell.

This can lead to them cutting prices (and sacrificing profits) to offset levies and maintain their market share in the US.

Why is Trump doing this?

Mr Trump has argued that imposing higher levies will help reduce illegal migration and the smuggling of the synthetic opioid fentanyl to the US.

On Mexico, the US leader claimed drug traffickers and the country’s government “have an intolerable alliance” that in turn impacts national security.

He further claimed that Mexican drug cartels are operating in Canada.

On China, he said the country’s government provides a “safe haven” for criminal organisations.

He has also pledged to use tariffs to boost domestic manufacturing.

“We may have short term some little pain, and people understand that. But long term, the United States has been ripped off by virtually every country in the world,” he said.

His aim appears to be to force governments in those countries to work much harder to prevent what he calls illegal migration and the smuggling of the deadly drug fentanyl. But, even if the countries do not do what America wants, it will still potentially benefit firms that produce goods in the US.

What could the consequences be?

Mexico and Canada are two of America’s largest trading partners, with the tariffs upending decades-old trade relationships.

Goods that could be affected most by the incoming tariffs include fruit and veg, petrol and oil, cars and vehicle parts and electronic goods.

New analysis by the Budget Lab at Yale University found that the average US household would lose the equivalent of $1,170 US dollars (£944) in income from the tariffs.

The research also found that economic growth would slow and inflation would worsen, as the tariffs forced up prices.

Immediate consequences were felt on Monday morning, as shares on Asian markets took a tumble.

Japan’s Nikkei opened down 2.9% while Australia’s benchmark – often a proxy trade for Chinese markets – fell 1.8%. Stocks in Hong Kong, which include listings of Chinese companies, fell 1.1%.

UK stocks were also significantly down, with the benchmark FTSE 100 index – containing the most valuable companies on the London Stock Exchange – dropped more than 1.3% on the open.

In Europe, stock markets opened sharply lower while the euro slid 1.3%. The Europe-wide index of companies, the Stoxx 600 dropped as much as 1.5%.

While Mexico’s peso hit its lowest in nearly three years.

‘Very scary path’

Sky News’ data and economics editor Ed Conway said the long term consequences of a trade war is that “everyone gets poorer”, which is what happened to the world before World War Two.

“As countries get poorer, they get frustrated and you get more nationalism,” Conway said, speaking on Friday’s Sky News Daily podcast.

“This is exactly what happened in the 1930s, and the world ended up at war with each other. It is a very, very scary path, and yes, we are basically on a potential of that path.”

However, Conway added that one positive of Mr Trump’s tariffs could be highlighting “massive imbalances” within the global economy.

He said Mr Trump may be able to shift the conversation to problems that “economists don’t want to talk about”.

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“At the moment, we have a dysfunctional global economy,” he explained.

“You have got massive imbalances like trade deficits [when a country’s imports exceeds the value of its exports] and trade surpluses [when a country’s exports exceeds the cost of its imports].

“There might well be a better way of everyone getting together and having a conversation and working out how to align their affairs, so we don’t have these imbalances in the future.

“And tariffs help to get you to this point.”

How has the world reacted?

Canadian Prime Minister Justin Trudeau reacted strongly against Mr Trump’s tariffs, saying his country would impose 25% tariffs on $155bn Canadian dollars (£85.9bn) of US goods in response.

He added that the move would split the two countries apart, and urged Canadians to choose domestic products rather than American ones.

Mexican President Claudia Sheinbaum posted on X to say she had ordered her economy minister to implement tariff and non-tariff measures to defend Mexico’s interests.

She said her government “categorically rejects” the claim that it has “alliances with criminal organisations” and called on the White House to “fight the sale of drugs on the streets of their major cities”.

Meanwhile, China has claimed the US action violates World Trade Organisation (WTO) rules, and vowed to bring a case before the body that governs global commerce.

It also threatened to take “necessary counter-measures to defend its legitimate rights and interests”.

A spokesperson for the UK government reiterated that the US is an “indispensable ally” and one of the country’s “closest trading partners”.

They added that the trading relationship was “fair and balanced”, after Mr Trump criticised the UK, saying it was “out of line”.

European Union (EU) leaders have also taken a strong stance against looming US tariffs.

Kaja Kallas, the chief of foreign policy for the bloc, said there were no winners in a trade war, and if the US and Europe started one “then the one laughing on the side is China”.

German Chancellor Olaf Scholz added that the EU is strong enough to “respond to tariffs with our own tariffs”, while French President Emmanuel Macron said declarations by the US were pushing Europe to be “stronger and more united”.

What’s the history of trade wars?

Imposing tariffs is not new to Mr Trump, or the US for that matter.

During his first term in the White House, he imposed higher levies on China and Vietnam.

In 2018, he imposed 25% tariffs on imported steel and 10% on imported aluminium from most countries, a response to what he said was the unfair impact of Chinese steel driving down prices and negatively affecting the US steel industry.

China then hit back with retaliatory tariffs on US imports, including 15% on 120 American products such as fruits, nuts, wine and steel pipes and a 25% tariff on US pork and recycled aluminium.

Before that, democrat Jimmy Carter went so far as to completely ban the sale of wheat to Russia, which remained in effect until Ronald Reagan ended it in 1981.

In 2019, Mr Trump also used the threat of tariffs as leverage to persuade Mexico to crack down on migrants crossing Mexican territory on their way to the US.

A study by economists at the Massachusetts Institute of Technology, the University of Zurich, Harvard and the World Bank concluded that Mr Trump’s tariffs the first time around failed to restore jobs to the American heartland.

The tariffs “neither raised nor lowered US employment” when they were supposed to protect jobs, according to Sky News’ US partner network NBC News.

World

Migrant crossings: Why are more people crossing the Channel on the weekend?

Published

3 hours ago

February 3, 2025

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Migrant crossings: Why are more people crossing the Channel on the weekend?

More people are crossing the English Channel in small boats on the weekend. Our data analysis shows last year 40% of the total number of arrivals happened on a Saturday or Sunday.

We have been looking into possible reasons why many more people are arriving in small boats on the weekend, and the explanation might not be quite what you expect.

Here are a few theories.

French staffing and resources

One suggestion is that French border force, police and coastguard are not working to a consistent level seven days a week.

“Gangs have realised there are lower or less engaged staffing on weekends on the French side,” a former senior Home Office official who worked closely on deals with the French told Sky News.

A former immigration minister said they found it “frustrating” that “we were paying the French but weren’t able to specify operational deployments”.

They said it would “not surprise me if the French had fewer people at the weekend and the people smugglers have come to realise that”.

Hundreds of millions have been given by the UK to France to police the Calais coast, most recently almost £500m in 2023.

Another former senior government official with responsibility for borders said the French would be able to demonstrate that “hundreds or thousands of officers are working there” but “strategically it suits France to have the gust with us”.

But when we put this to the French side there was a pushback.

Marc de Fleurian, the Calais MP from Marine Le Pen’s National Rally party, says “blaming the other side of the Channel” is the “easy answer”.

He said it’s “cowardly to say it’s the other side’s fault”.

Pierre Henri Dumont, who was the Calais MP from 2017-2024, said: “The reality is you can have as many police officers as you want, but people will cross the Channel. If you have eight rather than 100 police officers that won’t change anything at all.”

A French coastguard source told Sky News there are the same staffing levels at the weekend, he says “any suggestion there is less staffing on the weekends is laughable and an easy thing to say”.

Sir Keir Starmer’s spokesman said the government’s work with the French saw “more than 28,000 dangerous unnecessary crossing attempts prevented last year”.

He added French law enforcing officers “routinely patrol beaches on weekends as well as during the week”.

Smuggler planning

Smuggler supply chains might be linked to a specific day for a range of reasons, for example, as one former senior Home Office official suggests, the fact “boat engines, or parts, might arrive on a Friday”.

Mr Dumont says smuggling networks rely on people to do small jobs, like transporting boats, who may also have day jobs in the week. He says the reasons behind the weekend uptick “are not necessarily predictable ones”.

Another factor may be that because French police tend not to intervene once a boat is in the water, many small boats set off from inland waterways. The canal-type waterways which come inland before the Channel are often full of fishing boats on weekdays, making it easier to launch from the waterways on weekends.

Another suggestion from a Home Office source is that while many migrants who cross the channel are based in the camps around Calais, many use public transport to arrive for a timed departure and are therefore reliant on transport timetables which may be more limited at different times of the week.

Weather coincidence

Leaked Home Office analysis shows that of the number of weekend days where small boat crossings were more likely because of good weather conditions was disproportionately high last year.

The figures show that 61 out of 197 days where the weather meant there was a realistic possibility, likely or highly likely there would be a channel crossing were weekend days. However, we only have figures for 2024, and it seems unlikely the weather alone could account for three years of higher crossings on weekend days.

World

Pro-Russian paramilitary leader killed in Moscow bomb blast

Published

3 hours ago

February 3, 2025

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Pro-Russian paramilitary leader killed in Moscow bomb blast

A senior pro-Russian paramilitary leader from eastern Ukraine has been killed in a bomb blast in the lobby of a luxury apartment building in Moscow.

The attack targeted Armen Sarkisyan, who Ukraine has accused of aiding Russia’s war in the eastern Ukrainian region of Donetsk, Russian media reported.

He was critically injured in the blast and later died in hospital, according to the Kommersant newspaper.

The bomb detonated as Mr Sarkisyan and his bodyguards entered the Scarlet Sails complex in the Russian capital.

One bodyguard was killed and three more injured, Kommersant reported.

Footage released by Russia’s main investigative agency showed shattered glass doors and debris scattered around the building’s lobby.

State news agency TASS called the bombing a well-planned assassination.

The attack “was carefully planned and was ordered,” a police official said, according to the agency. “Investigators are currently identifying those who ordered the crime.”

Russian authorities said a criminal case had been launched into the blast.

Elite neighbourhood now on high alert

There was a tense atmosphere outside the upmarket Scarlet Sails residential complex.

Flustered residents were ushered in and out by the on-site security team, who appeared nervous at the presence of so many cameras.

Like at other gated communities in the Russian capital, visitors are required to show ID to gain entry and must have a valid reason.

So how did someone smuggle in an explosive?

One suggestion here is that the perpetrator could have posed as a courier or contractor. We saw several delivery drivers come and go, even with the heightened security.

As well as the officials at the gate, there was a line of traffic police officers checking vehicles. And inside the compound, there were dozens of law enforcement officers on patrol – an elite neighbourhood now on high alert.

‘Crime boss’

Ukraine’s SBU intelligence service previously described Mr Sarkisyan, who was born in Armenia, as a “crime boss” in the Donetsk region, which Russia has largely controlled since 2014. It also said he was officially suspected of participating in and aiding “illegal armed groups”.

The SBU said Mr Sarkisyan had formed a pro-Russian military unit made up of local convict fighters and organised purchases of supplies for frontline units.

It said in 2022 he founded a pro-Russian paramilitary unit composed mostly of fellow ethnic Armenians to fight against Kyiv’s forces.

In December, Ukraine claimed a bomb blast outside a Moscow apartment building that killed the Russian General Igor Kirillov.

It has not yet commented on the latest blast in Moscow.

World

Woman dies and thousands urged to move to higher ground as ‘record-breaking rainfall’ hits Queensland

Published

6 hours ago

February 3, 2025

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Woman dies and thousands urged to move to higher ground as 'record-breaking rainfall' hits Queensland

A woman has died and thousands of people have been urged to move to higher ground due to major flooding in northern Australia.

Torrential rains have hammered the state of Queensland over the past three days – with residents warned the floodwaters may “pose a threat to life and property”.

The rainfall has also left around 10,000 homes without power, according to reports in Australia.

The flooding in Queensland was triggered by heavy rain from a low pressure system rich in tropical moisture, Australia’s weather forecaster, the Bureau of Meteorology, said.

More than 47 inches of rain has been dumped on the town of Ingham and the city of Townsville over the past three days, Nine News reports.

Matt Collopy, from the Bureau of Meteorology, told Australian media there has been “record-breaking rainfall in many locations”, without specifying where.

Emergency alerts have been issued for several areas in and around Townsville, while the Bureau of Meteorology said major flood warnings were in place around multiple rivers near the coast of Queensland on Monday morning.

It came after a woman died in Ingham on Sunday after a State Emergency Service boat she was travelling in flipped over, according to Australian media.

Emergency responders carried out 11 water rescues overnight and hundreds of people were taken to evacuation centres.

On Sunday, regional emergency management authorities told people in affected low-lying areas to “collect their evacuation kit and move to a safe place on higher ground”.

Hinchinbrook Shire, a coastal area home to around 11,000 people in the north of the state, is one of the areas experiencing major flooding, Queensland authorities said.

Meanwhile, residents have been warned to be wary of crocodiles that could be lurking in the floodwaters.

Mr Crisafulli told ABC News in Australia on Monday that the state had faced rainfall of “monsoonal proportions”.

He added: “We’re talking about communities that in a two-day window have received over a metre of water.

“It’s quite frankly incredible… some of the images that we’re seeing on the ground of bridges ripped in two, of business inundated… there will be damage to agriculture.”

Mr Collopy said: “This is a significant and protracted weather event that we’re seeing with record-breaking rainfall in many locations. That rainfall is expected to ease over the next 24 hours and as you move into Tuesday, Wednesday, that easing trend continues.

“But there is a lot of water in those catchments. There’s already an incredible amount of water on the ground. There is more significant rain to come, so it will take days for that water to come out of those systems.”

North Queensland is home to large zinc reserves as well as major deposits of silver, lead, copper and iron ore, with Townsville a major processing centre for the region’s base metals.

In 2019, severe floods in the area disrupted lead and zinc concentrate rail shipments and damaged thousands of properties.

Frequent flooding has hit Australia’s east in recent years including “once in a century” floods that inundated Queensland’s neighbouring Northern Territory in January 2023 during a multi-year La Nina weather event.