Donald Trump’s tariffs: What’s going on and what does it all mean?
Donald Trump has announced 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 said on Sunday 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.
Trade war latest: Follow live updates
The levies were expected to all take effect on Tuesday, with Mexico and Canada both announcing counter-tariffs of their own in response.
However, Mexican President Claudia Sheinbaum said in a news conference on Monday that implementation of the tariffs would be paused for a month, after she and Mr Trump had a conversation and came to an agreement.
But Mr Trump has also threatened to go further, saying tariffs on the European Union would be implemented “pretty soon”.
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Trump’s proposed tariffs
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.
Mr Trump’s proposed tariffs
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 – as appears to have been agreed by Mexico. 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.
Read more: This is how US consumers will be affected
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Why Trump’s tariffs could cost you
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.
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Tariffs against Canada ‘will put US jobs at risk’
Mexican President Ms Sheinbaum posted on X on Sunday 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”.
A day later, she posted saying she and Mr Trump had a “good conversation” and “reached a series of agreements”.
These agreements include Mexico sending 10,000 troops to the border to “prevent drug trafficking from Mexico to the United States, particularly fentanyl”.
Mr Trump responded to the agreement with Ms Sheinbaum, saying negotiations between the two will be ongoing to try and achieve a “deal”.
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”.
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Mexico responds to Trump’s tariffs
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”.
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EU can react with its own tariffs
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.
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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.
We rarely think about how essential and reliable electricity grids are until they fail.
Now, millions of people across Spain, Portugal and parts of France are likely thinking of little else.
While local power cuts are fairly common, what’s happened across the Iberian peninsula is something far more extreme.
Much of Spain and Portugal’s electricity transmission system collapsed in seconds including in major cities Lisbon, Madrid, Barcelona and Seville.
Blackouts latest: ‘Rare atmospheric phenomenon’ behind outages
It’s likely the outage will surpass Europe’s largest blackout to date when 56 million people in Italy and Switzerland lost power for up to 12 hours in 2023.
The cause of the outage is unclear. Portugal’s grid operator has blamed a “rare atmospheric phenomenon” that caused “anomalous oscillations” in high voltage power lines in Spain.
Spain’s grid operator has yet to respond to that or provide an update on the cause. But it’s unlikely whatever caused the outage was a single, localised event.
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Mayhem in Spain after major power outage
A major power line going down can cause a large outage – as it did in 2021, when an interconnector between France and Spain failed leaving a million people without power for a few hours.
But it’s unlikely to cause a system-wide failure of the kind we’re seeing now.
However, when things do start to fail on a power grid, they can cascade uncontrollably.
Keeping a grid running is a constant and highly complex balancing act.
People outside a terminal at Lisbon Airport during the blackout. Pic: Reuters
Spain’s mains AC electricity supply grid, like ours in the UK, runs at 50Hz. That frequency is based on the speed at which generating hardware such as gas and nuclear turbines spin.
If there are sudden fluctuations in power supply or demand – a power station failing or a high voltage power line going down, for example – the frequency of AC power in the transmission lines changes and circuit breakers trip to protect either the transmission network, or power plant hardware from burning out.
To prevent such failures, grid engineers constantly measure and forecast supply and demand to keep the grid balanced.
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To protect the system in emergencies, they occasionally have to “shed load” by cutting power to parts of the grid – the reason we’ve all experienced the occasional short-lived power cut.
But if balance is lost, a grid can fail in a domino effect with sections of the grid tripping, then power plants shutting down to protect themselves from the drop in demand, one after another.
The challenge now, and it’s a nightmare for Spain and Portugal’s power engineers, is to gradually restore the grid section by section while maintaining the balance of supply and demand.
Act too fast, and the grid can trip again. Take too long and some power plants or substations might struggle to restart – especially if they rely on battery power to do so.
While some regions of Spain have already had power restored, and Portugal says its power will be back to normal within hours, it could take much longer for the system to be fully restored.
A Palestinian diplomat has told the United Nations’ top court that Israel is “starving, killing and displacing” civilians and targeting aid workers in Gaza.
Israel denies deliberately targeting civilians and aid staff and did not attend the hearing at the International Court of Justice (ICJ) on Monday.
At The Hague, Palestinian ambassador to the Netherlands, Ammar Hijazi, accused Israel of breaching international law in the occupied territories.
He said: “Israel is starving, killing and displacing Palestinians while also targeting and blocking humanitarian organisations trying to save their lives.”
Ammar Hijazi, right. Pic: AP
A protester outside the International Court of Justice on Monday. Pic: AP
The hearings are focused on a request last year from the UN General Assembly, which asked the court to weigh in on Israel’s legal responsibilities after the country blocked the United Nations Relief and Works Agency (UNRWA) for Palestine refugees from operating on its territory.
In a resolution sponsored by Norway, the General Assembly requested an advisory opinion, a non-binding but legally important decision from the court, on Israel’s obligations in the occupied territories to “ensure and facilitate the unhindered provision of urgently needed supplies essential to the survival of the Palestinian civilian population”.
Pic: AP
While Israel was not in court, foreign minister Gideon Saar told a news conference in Jerusalem: “I accuse UNRWA, I accuse the UN, I accuse the secretary-general and I accuse all those that weaponised international law and its institutions in order to deprive the most attacked country in the world, Israel, of its most basic right to defend itself.”
Forty states and four international organisations are scheduled to participate in the ICJ hearings, with it likely taking months for the court to rule.
Pic: AP
The hearings come amid the near collapse of the humanitarian aid system in Gaza.
Israel has blocked the entry of food, fuel, medicine and other humanitarian supplies since 2 March.
The World Food Programme said last week its food stocks in the Gaza Strip had run out.
Palestinians wait to receive food cooked by a charity kitchen, in Beit Lahiya. Pic: Reuters
Israel also renewed its bombardment on 18 March, breaking a ceasefire, and seized large parts of the territory, claiming it aims to push Hamas to release more hostages.
Overnight into Monday, at least 27 Palestinians were killed in Israeli strikes, according to local health officials.
An air strike hit a home in Beit Lahia, killing 10 people, including a Palestinian prisoner, Abdel-Fattah Abu Mahadi, who had been released as part of the ceasefire.
His wife, two of their children and a grandchild were also killed, according to Indonesia Hospital which received the bodies.
An Israeli air strike hit a home in Beit Lahia, killing 10 people. Pic: AP
Pic: AP
Another strike hit a home in Gaza City, killing seven people, according to the Gaza Health Ministry’s emergency service.
And late on Sunday, a strike hit a home in the southern city of Khan Younis, killing at least 10 people, including five siblings as young as four-years-old, according to the health ministry.
Two other children were killed along with their parents, according to Nasser Hospital which received the bodies.
There was no immediate comment from the Israeli military.
Israel claims it makes every effort to avoid harming civilians and blames Hamas for their deaths because the militants operate in densely populated areas.
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World Food Programme stocks in Gaza have run out
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Israel’s ban on UNRWA came into effect in January.
The organisation has faced increased criticism from Prime Minister Benjamin Netanyahu and his far-right allies, who claim the group is deeply infiltrated by Hamas, which UNRWA refutes.
Amir Weissbrod, a foreign ministry official, presented Israel’s case against UNRWA on Monday.
He accused it of failing to act before the war against evidence that Hamas had used its facilities, including by digging tunnels underneath them.
The official said UNRWA employed 1,400 Palestinians with militant ties.
Israel claims some of those employees also took part in Hamas’ attacks on 7 October 2023, with at least three of those employees still allegedly working for the UN.
The presentation included videos, documents and pictures of the alleged employees.
The 7 October 2023 attack in southern Israel killed around 1,200 people and prompted the ongoing Israeli offensive in Gaza – which the territory’s health ministry says has killed more than 52,000 people.
UNRWA said it fired nine staffers after an internal UN investigation concluded that they could have been involved, although the evidence was not authenticated and corroborated.
The ban does not apply directly to Gaza, but UNRWA is prohibited from operating inside Israel which affects the agency’s ability to function.
Israeli officials claim they are looking for alternative ways to deliver aid to Gaza that would cut out the UN.
The conclave to elect Pope Francis’s successor will begin on 7 May, the Vatican has announced.
Some 135 cardinal electors – those under the age of 80 – will take part and vote for the new pontiff.
The rituals of the event, held in the Sistine Chapel, are elaborate and date back centuries. So how does the process work?
When Pope Francis died, the Catholic Church entered a period known as “sede vacante”, meaning “empty seat”.
His ring and seal – used to dispatch papal documents – were broken to prevent anyone else from using them.
Cardinal Kevin Farrell – the Camerlengo, or chamberlain, who announced Francis’s death – became the interim chief of the Catholic Church.
Pic: Reuters
The conclave
Cardinals travel to Rome from all over the world and stay until a new pope is chosen.
Of the 252 current ones, there are 135 cardinal electors: 53 from Europe; 23 from Asia; 20 from North America; 18 from Africa; 17 from South America; and four from Oceania.
Italy has the most cardinals who can vote, with 17, while the US has 10 and Brazil has seven. The UK has three.
A papal crest dedicated to Pope Pius XII. Pic: Reuters
Once the conclave begins, the cardinals will not emerge from the Vatican until a new pope has been chosen. The word “conclave” comes from Latin, meaning “with key” – a reference to the isolation in which the cardinals are kept.
While holding voting sessions in the Sistine Chapel, they sleep in the Casa Santa Marta – a guesthouse inside the Vatican’s grounds.
The longest conclave lasted almost three years, between 1268 and 1271. Several have lasted only one day. The one which elected Pope John Paul in 1978 lasted less than three days. Cardinals chose Pope Francis in around two days.
While the conclave is ongoing, cardinals are unable to communicate with the outside world. No telephones, internet use or newspapers are allowed.
Except for the first day, when only one ballot is held, the cardinals hold two daily votes until one candidate has a majority of two-thirds plus one. They are sworn to secrecy about the voting.
White smoke?
So how do we know if a decision has been reached? Yes, this is the black smoke, white smoke part.
If the cardinals have not reached a majority, the cards and the tally sheets are placed in a stove and burned with an additive to produce black smoke, showing the outside world that a pope has not yet been chosen.
No pope yet… black smoke rising from the Sistine Chapel. Pic: Reuters
Watching for the tell-tale smoke arising from the top of the Sistine Chapel is a tradition, with Catholics crowding into St Peter’s Square for the spectacle.
If no result has been reached after three days, the sessions are suspended for a day to allow for prayer and discussion. More ballots are held until a two-thirds majority is reached.
When enough cardinals have agreed on a candidate, he is asked if he accepts the papacy and by which name he wishes to be known.
The ballots are burned as before, but with an additive to produce white smoke.
A Papal white skull cap. Pic: Reuters
New pope proclaimed
The new pope then dons his new papal vestments – tailors keep large, medium and small sizes ready – and sits on a throne in the Sistine Chapel to receive the other cardinals who file up to pay homage and swear obedience to the church’s new leader.
The senior cardinal deacon then steps out on to the central balcony of St Peter’s Basilica overlooking the square and announces in Latin: “Annuntio vobis gaudium magnum. Habemus Papam” (I announce to you a great joy. We have a pope) and reveals the cardinal’s name and the name he has chosen.
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The new pope then appears on the balcony to deliver his first public pontifical greeting and bless the crowds in St Peter’s Square.
A few days later, he celebrates a mass that marks the beginning of his papal ministry.
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