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

Published

3 months ago

February 4, 2025

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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?

On Sunday the US president said 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, on Monday both Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau said the implementation of tariffs would be paused for a month after they had calls with Mr Trump.

But 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 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 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 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 the average US household would lose the equivalent of $1,170 US dollars (£944) in income from the tariffs.

The research also found 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 “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 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 “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 the move would split the two countries apart, and urged Canadians to choose domestic products rather than American ones.

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 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 retaliated by imposing 10% tariffs on American crude oil, agricultural machinery, large-displacement cars and pickup trucks.

There will also be 15% tariffs on coal and liquefied natural gas, as well as an investigation into Google.

China also said it is imposing export controls on rare earth metals such as tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items – the country controls much of the world’s supply of such metals, which are critical for the transition to clean energy.

They will not come into effect until Monday 10 February, however.

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 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

Terror group supporters posted on TikTok, YouTube and Google from site targeted in Indian airstrikes

Published

4 hours ago

May 11, 2025

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Terror group supporters posted on TikTok, YouTube and Google from site targeted in Indian airstrikes

Social media accounts expressing support for a Pakistan-based terror group linked to al Qaeda appear to have posted recent videos from a Pakistan mosque targeted by Indian airstrikes.

Sky News has found videos posted on TikTok, YouTube and Google that appear to be filmed at the Markaz Taiba Mosque in Muridke. The captions and usernames contain expressions of support for the Lashkar-e-Taiba (LeT) and a group called ‘313’.

Sky News has found and geolocated multiple videos that appear to be filmed in the area where the captions include either or both ‘313’ and LeT.

Some of the videos show men in the streets with guns. Another post captioned a video of children doing martial arts training inside the targeted mosque, “we are little soldiers, and we fight the non-believers”.

The caption uses the hashtag #جہاد313, which translates to ‘313’ jihad.

‘313’ appears to refer to the 313 Brigade, a proscribed terror organisation in Pakistan.

In a TikTok video posted to the Google page for Markaz Taiba Mosque in Muridke, a man can be seen walking along the street with a gun.

The account that posted that video wrote in their description, “Lashkar Taiba, Mujahid Force, ‘313’ and Markaz Taiba Muridke”, self-proclaiming their support for the groups.

India’s retaliatory strikes on Pakistani-adminstered Kashmir and Pakistan on 7 May came after a deadly attack in Indian-administered Kashmir last month.

Gunmen opened fire on tourists, killing 26 people and injuring dozens in a popular holiday spot near Pahalgam, Kashmir, on 22 April.

LeT were accused by India of involvement in the Pahalgam attack through their proxy the Resistance Front, which claimed responsibility for the attack.

LeT, which is designated as a terrorist organisation by the UN Security Council and the UK, focuses on fighting Indian control in Kashmir and is based in the Punjab region of Pakistan.

Pakistan denies allegations of terror camps operating in the country. This region has been in the control of the Punjabi government since 2010. The Punjab government condemned the Indian strikes, and declared a state of emergency across Punjab.

Muskan Sangwan, senior intelligence analyst at TRAC, a terrorism research and analysis consortium, told Sky News: “Brigade 313 is al Qaeda in Pakistan. It’s an umbrella organisation for members of several groups like Taliban, Lashkar-e-Jhangvi, Haqqat ul-Jihad-al-Islami, Jaish-e Muhammad, Lashkar-e-Taiba, and Jundullah.”

Ms Sangwan explained that ‘313’ refers to the number of companions said to have fought with the Prophet Mohammed in the Battle of Badr.

TRAC have seen a recent uptick in TikTok videos and other social media posts that refer to ‘313’.

Many of the accounts are linked to each other.

Ms Sangwan said: “They [the TikTok users] mostly use ‘313’ as a hashtag… trying to push that hashtag to as many people it can reach on social media.”

Sky News sought to verify the location by comparing before and after videos from the strike location, and using the video released by the Indian army conducting the strike.

One video showing damage at the strike location was posted by a user with 313 in their TikTok username.

Below is satellite imagery that shows the destruction of the site.

In one TikTok, the video is captioned “bring your arms and ammunition and go to war”. The text on the screen of the TikTok is ‘313’ and he is carrying a gun.

The group are comfortable with having an online presence. On the Google tag for Markaz Taiba Mosque in Muridke, men pose for a group photo. Almost all the people in the photo have used ‘313’ on TikTok.

Ms Sangwan explained: “With these people from Muridke, pushing this propaganda on social media would generate a lot of significance in terms of recruitment and in terms of gaining support from local people and from other people.”

Sky News’ Asia correspondent Cordelia Lynch has reported on the ground in Muridke.

India says it struck Markaz Taiba, a site in Muridke about 15 miles (25km) from the border, which has long been claimed to be a terrorist training site associated with LeT.

MEMRI, a US-based research group that monitors terrorist threats, told Sky News: “It has been known for decades that Lashkar-e-Taiba has its headquarters in Muridke.”

Sky News contacted the Pakistan Ministry of Defence for comment. Khawaja Asif, Pakistan’s defence minister, told Sky News: “This appears to be a random video with background music added later – consistent with how TikTok trends often function. If this is to be considered credible evidence, we could produce millions of similar clips ourselves.”

Mr Asif also said that any suggestion that the mosque was used as a base by terrorists was a “completely false, social media made up hoax”.

On 7 May, after the strikes in Pakistan, the Indian subcontinent branch of al Qaeda issued a statement condemning India’s actions and encouraging its supporters to wage jihad against India.

The Data and 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

Putin wants direct talks with Ukraine, but Zelenskyy and allies demand 30-day ceasefire from Monday

Published

4 hours ago

May 11, 2025

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Putin wants direct talks with Ukraine, but Zelenskyy and allies demand 30-day ceasefire from Monday

Russia’s president has suggested fresh peace talks with Ukraine in Istanbul as part of “direct negotiations” but also “without preconditions”.

Vladimir Putin put forward the proposal as European leaders including Sir Keir Starmer threatened him with fresh sanctions if Russia failed to comply with an unconditional 30-day ceasefire starting on Monday.

Kremlin spokesperson Dmitry Peskov told CNN that Moscow will need to consider those terms.

On Saturday the prime minister met Ukrainian President Volodymyr Zelenskyy alongside French President Emmanuel Macron, recently elected German Chancellor Friedrich Merz and Polish Prime Minister Donald Tusk in Kyiv.

Speaking at the Kremlin in the early hours of Sunday, Mr Putin did not directly address the 30-day ceasefire proposal but instead offered to restart peace talks Russia and Ukraine held in 2022.

“We propose the Kyiv authorities resume the negotiations they interrupted at the end of 2022… to resume direct negotiations… without any preconditions… to begin without delay next Thursday 15 May in Istanbul,” he said.

Russia’s own unilateral three-day ceasefire, declared for the 80th anniversary of victory over Nazi Germany, expired on Saturday, and Ukraine said Russian forces have repeatedly violated it.

During the summit in Kyiv, European leaders secured the backing of Donald Trump after briefing him on the progress made on the so-called “coalition of the willing” plans in a 20-minute phone call.

“All of us here, together with the US, are calling Putin out,” said Sir Keir.

“So we are clear, all five leaders here – all the leaders of the meeting we just had with the coalition of the willing – an unconditional ceasefire, rejecting Putin’s conditions, and clear that if he turns his back on peace, we will respond.

“Working with President Trump, with all our partners, we will ramp up sanctions and increase our military aid for Ukraine’s defence to pressure Russia back to the table.”

It comes after President Trump called for “ideally” a 30-day ceasefire between Kyiv and Moscow, and warned that if any pause in the fighting is not respected “the US and its partners will impose further sanctions”.

During Mr Putin’s statement on Sunday, he insisted he would support peace talks: “We are committed to serious negotiations with Ukraine.”

He told reporters: “Their purpose is to eliminate the root causes of the conflict, to establish a long-term, lasting peace. We do not rule out that during these negotiations it will be possible to agree on some new truces, a new ceasefire.”

Putin cobbles together response to 30-day ceasefire demand

The Kremlin billed this as a meaningful statement from Vladimir Putin but how much does it actually mean?

His comments are exactly the same as what Moscow has been saying for weeks, only repackaged with a date. The latest attempt to avoid committing to a 30-day ceasefire.

Next Thursday – 15 May – is when he’s proposing to hold direct talks with Ukraine. Only then, he says, can they discuss the details of a longer truce.

Istanbul is apparently the venue. The trouble is, Turkey doesn’t appear to know about it. The Russian leader said he’d call President Erdogan tomorrow.

Given America’s apparent support for Europe’s ultimatum to Russia (ceasefire or sanctions), he had to respond with something new.

But this felt like a proposal that had been hastily cobbled together in the corridor outside.

World

Pope prays at tomb of predecessor during first outing since election

Published

4 hours ago

May 11, 2025

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Pope prays at tomb of predecessor during first outing since election

Pope Leo XIV made his first outing since his election on Saturday, making a surprise stop to pray at the tomb of his predecessor.

On Saturday afternoon, the new pontiff travelled to a sanctuary dedicated to the Madonna in the town of Genazzano.

The sanctuary is managed by Augustinian friars, the order the pope belongs to, and has been a place of pilgrimage since the 15th century.

The pontiff’s namesake. Pope Leo XIII, elevated it to a minor basilica and expanded its convent in the early 1900s.

After praying, Leo greeted the faithful gathered outside and offered a blessing.

On his way back to the Vatican, he stopped to pray at Pope Francis’s tomb at St Mary Major Basilica.

Earlier in the day, Leo held his first formal audience and said the Catholic Church must take the lead in facing threats to workers, such as AI.

The 69-year-old said the technology posed “new challenges for the defence of human dignity, justice and labour”.

The leader of the world’s 1.4 billion Catholics referred to AI as he explained his choice of name to the cardinals who elected him.

He said he identified with his namesake Pope Leo XIII, who was pontiff from 1878 to 1903 and addressed workers’ rights and capitalism at the dawn of the industrial age in the 1891 encyclical Rerum Novarum.

The late pope, who laid the foundation for modern Catholic social thought, criticised both laissez-faire capitalism and state-centric socialism.

“In our own day, the church offers everyone the treasury of its social teaching in response to another industrial revolution and to developments in the field of artificial intelligence that pose new challenges for the defence of human dignity, justice and labour,” Leo said.

The Pope also made clear he will follow in the modernising reforms of his predecessor Pope Francis to make the Catholic Church inclusive, attentive to the faithful, and an institution that looks out for the “least and rejected”.

Leo said he was fully committed to the reforms of the Second Vatican Council, the 1960s meetings that modernised the church.

Toward the end of his pontificate, Francis became increasingly vocal about the threats to humanity posed by AI and called for an international treaty to regulate it.

Francis brought his message to the G7 summit of world leaders last year, insisting AI must remain human-centric so decisions about when to use weapons or even less-lethal tools always remain made by humans and not machines.