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

Published

10 months 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

Fierce battle for frontline towns where Ukraine’s soldiers are surrounded

Published

47 mins ago

November 23, 2025

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Fierce battle for frontline towns where Ukraine's soldiers are surrounded

Footage geolocated by Sky News showed Russian soldiers walking through the Shakhtarskyi neighbourhood on the outskirts of Pokrovsk on Thursday.

The video sheds light on the situation in this key frontline area, as Russian forces slowly encroach on Myrnohrad, the satellite town to Pokrovsk, and one of its last remaining outposts.

Videos geolocated by Sky News show fighting intensifying in recent weeks, as Russian forces attempt to gain control of the towns and their network of road and rail intersections.

Gaining control here would give Russia a base from which to access key cities further north that form part of Ukraine’s “fortress belt”.

Russian forces are advancing from all directions, according to the Institute for the Study of War (ISW), with only one small opening to the northwest of Myrnohrad remaining.

Estimated to be only 3km wide by military experts, this withdrawal corridor is patrolled by Russian drone units which monitor the area for moving vehicles and those who may attempt to leave on foot.

Russian forces have been advancing on Myrnohrad since late October.

Video from a Ukrainian unit in Myrnohad, posted on 29 October, shows a Russian vehicle attempting to enter the town from the northeast. The tank is attacked and soldiers attempting to enter on foot are targeted.

Video posted on 3 November shows Russian forces on the ground in the south of the town.

By 8 November, Russian strikes begin to pummel the northeast of Myrnohrad, the location of many of the town’s high-rise buildings, at that time, held by Ukrainian forces.

George Barros, Russia Team & Geospatial Intelligence Team Lead at ISW, told Sky News that Russian strategy in Pokrovsk has been to erode Ukrainian logistical capacity using drones and artillery over the course of several months.

“After denying supply lines and degrading the frontline forces by essentially cutting them off from behind and starving them out in their positions, then the Russians move forward with their infantry and frontal assaults,” Barros explained.

Capture the flag

For a brief period, it looked as though Russian forces had captured Myrnohrad.

Videos posted on 13 November appeared to show a Russian flag flying over the Myrnohrad mine.

However, video posted the following day showed a Ukrainian drone shooting it down.

Both Russian and Ukrainian forces continue to fight for control of Myrnohrad, with videos posted on the 19 and 20 November showing Russian airstrikes on Ukrainian positions in the town, and Ukrainian drone strikes targeting Russian forces on foot.

While the exact numbers of Russian and Ukrainian forces in the area remains unclear, reports indicate that three key Russian units are active in Pokrovsk and Myrnohrad, and are advancing on the towns from the north and south.

A number of Ukrainian units remain inside the towns, including the 145th Assault regiment and the 32nd, 35th, 38th and 155th Brigades. Reports indicate that more Ukrainian units have been moved into surrounding areas to hold the withdrawal corridor open.

Sky News reached out to the Ukrainian brigades still in Myrnohrad, but they declined to comment, citing military regulations.

Strategic significance

Natia Seskuria, associate international security fellow at the Royal United Services Institute (RUSI), explained that the area is important for the Ukrainians to keep and the Russians to take because of its strategic position.

“Situated at a major road and rail intersection in Donetsk Oblast, Pokrovsk has functioned as a central artery for moving troops, equipment, and supplies to Ukrainian units deployed along the surrounding front.”

Russia “would gain a platform to redirect its offensive efforts toward Ukraine’s principal defensive urban centres… including Kramatorsk and Slovyansk,” Seskuria said.

Ukrainian and Russian soldiers in Pokrovsk have fought intensely and at close quarters over the last month.

In late October US-made Black Hawk helicopters containing specialist troops directed by Ukrainian military intelligence entered Pokrovsk to try to keep the town.

But as Russian troops advance, Myrnohrad is becoming the last stronghold of Ukrainian forces in the area.

Uncertain future

At least up until 12 November, there were still civilians living in Pokrovsk and Myrnohrad, despite strikes on buildings in both cities.

A post made on that day by the Donetsk state regional administration estimated 1,200 people remain living in Pokrovsk and 900 in Myrnohrad.

Evacuation is only possible with the help of the military or police, and it is not clear how many have evacuated in the 11 days since.

Barros of ISW says gaining Pokrovsk would increase Russia’s leverage at the negotiating table.

“If the Russians can successfully convince enough international leaders that, okay, the Russians took Pokrovsk, they’re going to take the next thing, and they’re going take the thing, so now let’s negotiate, then that is a strategic victory for the Russians.”

Production by Michelle Inez Simon, Visual Investigations Producer.

The Data x Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.

World

Torrential rain triggers deadly flooding and landslides in Vietnam

Published

47 mins ago

November 23, 2025

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Torrential rain triggers deadly flooding and landslides in Vietnam

Torrential rain, flooding and landslides has left more than 100 people dead or missing in Vietnam.

Rainfall has exceeded 74.8in (1.9 metres) in some parts of central Vietnam over the past week.

The region is a major coffee production belt and home to popular beaches, but it is also prone to storms and floods.

Fatalities have been reported in Dak Lak province and the neighbouring Khanh Hoa province.

Footage has been released by local police of a dramatic rescue, involving a drone which airlifted a stranded man to safety from an island in the middle of the Serepok River, Dak Lak province.

The government estimates the flooding has cost the economy around 8.98 trillion dong (£260m).

More than 235,000 houses were flooded and nearly 80,000 hectares of crops were damaged, Vietnam’s disaster agency said.

On Thursday, VietnamNet newspaper said that a suspension bridge on Da Nhim River in Lam Dong province had been swept away.

Video footage posted online showed the bridge being swallowed by the river in just a few seconds.

Naval forces have been deployed to help stranded citizens in Khanh Hoa, the Vietnam News Agency reported, adding that floodwaters had reached record highs in many areas.

Photos shared in state media reports showed residents, including children, sitting on the roofs of flooded houses in Khanh Hoa, Gia Lai and Dak Lak provinces.

A seven-year-old girl was rescued late on Wednesday in Da Lat, the capital of Lam Dong province, after being buried by a landslide, the Nhan Dan newspaper reported.

The landslide, triggered by heavy rain, knocked down and buried part of the house where the girl was staying.

She was pulled out after an hour and a half and was taken to hospital with a broken leg, according to the report.

World

Several airlines cancel Venezuela flights after ‘hazardous situation’ warning

Published

47 mins ago

November 23, 2025

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Several airlines cancel Venezuela flights after 'hazardous situation' warning

Three international airlines have cancelled flights departing from Venezuela after a “potentially hazardous situation” warning.

The US Federal Aviation Administration (FAA) on Saturday issued an alert to airlines flying over the country, citing the “worsening security situation and heightened military activity in or around Venezuela“.

The US is poised to launch a new phase of operations related to the South American nation in the coming days, four US officials said.

The exact timing or scope of the operations, as well as whether President Donald Trump has made the final decision to act, have not yet been established.

Brazil’s Gol, Colombia’s Avianca and TAP Air Portugal cancelled their flights from the capital, Caracas, in north Venezuela, on Saturday, according to Flightradar24 and the official website of Simon Bolivar Maiquetia International Airport.

TAP Air Portugal confirmed it cancelled flights scheduled for Saturday and next Tuesday.

“This decision follows information issued by the United States aviation authorities, which indicates that safety conditions in Venezuelan airspace are not guaranteed,” the airline said.

The Trump administration has been considering Venezuela-related options to tackle what it has portrayed as President Nicolas Maduro’s role in supplying illegal drugs that have killed Americans.

Venezuela’s president has denied having any links to the illegal drug trade.

Mr Maduro, who is celebrating his 63rd birthday on Sunday and has been in power since 2013, has claimed Mr Trump is looking to oust him and that Venezuelan citizens and the military will rally against any such attempt.

Aeronautica Civil de Colombia said in a statement there were “potential risks” of flying in the Maiquetia area “due to the deterioration of security conditions and increased military activity in the region”.

Spain’s Iberia also said it was cancelling its flights to Caracas from Monday until further notice.

Reports of looming action have been growing in recent weeks as the US military has deployed forces to the Caribbean, amid heightened tensions with Venezuela. The Pentagon referred questions to the White House and the CIA declined to comment.

There has been a huge US military build-up in the region, including the US Navy’s largest aircraft carrier, USS Gerald R Ford, at least eight other warships, and F-35 aircraft.

The build-up in the Caribbean has been rumbling on for months, and Mr Trump has authorised covert CIA operations in Venezuela.

The US plans on Monday to designate the Cartel de los Soles, a Venezuela-based alleged criminal group, a foreign terrorist organisation for what the US sees as its role in importing illegal drugs into America, officials said.