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?
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”.
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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 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 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.
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 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.
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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 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.
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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 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.
At least 50 people, including 33 children, have been killed in southern Sudan after a drone attack by paramilitary forces hit a nursery in South Kordofan state.
Sudan Doctors’ Network says paramedics on the scene in the town of Kalogi were also targeted by the Rapid Support Forces (RSF) in a “second unexpected attack”.
Rights group Emergency Lawyers reported a “third civilian site” near the previous two attacks was also targeted.
The death toll is expected to be higher, but communication blackouts have made it difficult to confirm the full number of casualties.
Emergency Lawyers says the strikes are a “flagrant violation of international humanitarian law, including the protection of civilians, especially children, and vital civilian infrastructure.”
UNICEF has urged both parties to stop the attacks immediately and allow safe access for humanitarian aid.
“Killing children in their school is a horrific violation of children’s rights,” said UNICEF representative for Sudan Sheldon Yett.
“Children should never pay the price of conflict.”
Read more from Sky News
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The attack on the nursery is among the latest in the two-year conflict between the RSF and Sudan’s military, where the focus has recently shifted to the oil-rich Kordofan states.
A photo released by UNICEF shows displaced children and families from al-Fashir. (Mohammed Jammal/UNICEF via AP)
Hundreds of civilians have been killed in the last few weeks as fighting shifted from Darfur, following the RSF’s violent takeover of the city of Al Fashir, which was marked with civilians being executed, rapes, sexual assaults and other atrocities.
Thousands managed to escape the violence, but thousands more are trapped or feared killed.
Grab from RSF social media channels in Al Fashir, Sudan
Meanwhile, Sudanese military aerial strikes last weekend killed at least 48 people, mostly civilians, in South Kordofan.
The RSF has also accused the military of carrying out a drone strike on the border with Chad, posting a video showing billowing black smoke.
The Associated Press has been unable to verify the video or whether there were any casualties, while Sudan’s military also hasn’t commented.
The RSF and the Sudanese military have been fighting for power over the country since 2023, which has seen more than 40,000 people killed, according to the World Health Organisation, although the real death toll is expected to be higher. 12 million people have been displaced.
The 3D picture we’re shown of Maryam’s skull shows a gaping hole.
It’s astonishing the young girl from Gaza even survived an Israeli bombing near her home.
But she’s sitting up in her hospital bed in the Jordanian capital Amman, as we look on and she’s smiling and joking during a call with her father who remains in the Palestinian territory.
“I’m okay,” she says cheerily, “how are you?”
She’s heard overnight there’s been severe flooding in Gaza and the tents and makeshift shelters which tens of thousands are living in, are now soaked and under water.
But her father is focussed on how his 12-year-old daughter is feeling ahead of yet another life-saving brain operation.
Maryam is a rarity.
She is one of a few hundred patients who’ve been allowed by the Israeli authorities to leave the Gaza Strip to receive critical medical help since the October 2025 agreement signed between Israel and Hamas, which was aimed at ending hostilities.
The World Health Organisation (WHO) says they’ve identified nearly 16,000 medical cases needing urgent critical care outside Gaza.
WHO data documented a total of 217 patients who left Gaza for medical care in other countries between the dates of 13 October and 26 November 2025.
Since then, Israel’s Coordination of Government Activities in the Territories (COGAT) has said a further 72 patients and caregivers from Gaza have departed the Israeli-occupied area for Jordan.
But behind them, they left a long queue of ill and wounded people in desperate need of the sort of specialised medical help Maryam Ibrahim is receiving in Jordan.
Alex Crawford and Dr Samer Elbabaa
Having survived the bombing and having survived the craniectomy (removing her fractured skull), Maryam’s next challenge was surviving the wait to receive permission to leave Gaza for the surgery which offered her a chance of long-term survival.
She waited almost half a year for this operation: an operation considered vital.
Without it, Maryam’s brain was unprotected. Any stumble or accident risked irreversibly injuring her brain and negatively impacting her neurological functions – a risk which was considerably heightened given where she’s living.
The Palestine Children’s Relief Fund (PCRF) which has funded her medical care in Jordan says they’ve “witnessed at first hand the catastrophic toll of this conflict on children’s health and well-being.
“Thousands have been orphaned, maimed or left with lifelong trauma. Entire hospitals and health centres have been destroyed leaving an entire population of children without access to even the most basic medical care.”
While humanitarian organisations continue to encounter challenges in organising evacuations from Gaza, two British surgeons were amongst a group of medics refused permission by the Israeli authorities to enter the territory.
Dr Victoria Rose, a plastic and reconstructive surgeon with the IDEALS charity, told Sky News: “WHO calculated that in 2025, only 47% of emergency medical teams were granted entry to Gaza.
“This is at a time when hundreds of local doctors have been detained by the IDF with many still unaccounted for. Gaza does not have the manpower to cope with the numbers of injured.”
Maryam
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Maryam’s case received widespread publicity after the intervention of the popular American children’s educator and YouTuber Rachel Griffin Accurso known as “Ms Rachel”.
She highlighted her case by talking to the little girl via Instagram after Maryam posted about how she was being bullied for her unusual appearance because of her cranial injury.
Maryam’s family realise she’s been unusually fortunate to receive this specialised care, but they know too that as soon as Maryam is well enough, the little girl will be returned to Gaza and an unpredictable future.
The Israeli authorities continue to insist via X that they are helping to organise humanitarian aid into Gaza and are committed to “facilitating a humanitarian-medical response” – which includes establishing field hospitals.
They have repeatedly suggested that it is the lack of coordination on the part of various countries and organisations which is the issue – but this runs counter to what multiple humanitarian groups and individuals have experienced.
Germany’s parliament has voted to reintroduce voluntary military service, but getting Gen Z recruits could prove tricky.
Across the country, students gathered to demonstrate against what they fear will be a return to conscription.
In Berlin, they held signs saying, “You can’t have our lives if we don’t eat your lies” and “peace is power”.
While most demonstrators were in their late teens or twenties, some parents also turned out with their younger children.
One mother held a placard declaring: “You can’t have my son”.
The new plan means from January, all 18-year-olds will be sent a questionnaire about their fitness and willingness to serve.
Men must fill it in, while for women it will be voluntary.
In the future, if the numbers of volunteers are too low, then parliament could trigger conscription at times of war or in emergencies.
It’s an idea which horrifies many in the crowd.
“None of us want to die for a country that doesn’t really care about us,” Levi tells me.
He says the government has ignored their calls for climate protections and better social conditions, so he feels no allegiance to them.
Levi
I ask: “If Germany was attacked, who do you think should defend it if Gen Z don’t want to?”
“Why don’t the people that started the war do it? I don’t see why the older people shouldn’t go to war. I mean, a lot of them already were in the army,” he replies.
17-year-old Sara agrees, declaring: “I would not be willing to die for any country.”
“I don’t think it’s right to send children or anyone against their will into the military, because war is just wrong,” she says.
“I’m never going to join the military and if Germany is attacked, I’ll just go somewhere else where there’s no war.”
Sara
While the government says the system will be voluntary for as long as possible, from 2027 all 18-year-old men will have to have a medical examination so the government can see who is fit to serve.
German defence minister Boris Pistorius says the mandatory medical is needed so that in the event of an attack, Germany would not waste time confirming “who is operationally capable as a homeland protector and who is not”.
The move is a massive cultural shift for Germany, which suspended mandatory military conscription on 1 July 2011.
“From my friends no one wants to volunteer because we don’t want to fight for a problem that’s not really ours. We didn’t start the problems, they [the government] did,” says Silas.
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Sky’s Europe Correspondent Siobhan Robbins investigates.
The change is a direct reaction to Russia’s invasion of Ukraine
Despite Moscow’s denials, NATO’s chief has warned Russia could be able to attack a member country in the next four to five years.
I ask 19-year-old Lola if she’s thinks Russia is a threat?
“It could be, maybe. However, I think there are more important issues, especially like social ones, than war,” she says.
Lola
Her friend, 28-year-old Balthasar, goes further, saying: “A country being able to attack isn’t the same as a country planning to attack.
“The track record of Russia has been to attempt at least diplomatic resolution, cooperation, and I think those are the right approaches to take in international politics, opposed to sabre-rattling, which the German government has resorted to.”
The German chancellor, Friedrich Merz, has said he wants to build the strongest army in Europe.
Germany currently has around 184,000 soldiers and wants to boost that by over 80,000 in the next decade.
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Volunteers are being offered incentives like a monthly wage of more than €2,000 (£1,750).
Despite this, a survey earlier this year found 81% of Gen Z wouldn’t fight for Germany.
In contrast, many of the older generation supported conscription.
At the Berlin protest, 17-year-old Valentin was the only person we met who reluctantly agreed to fight.
Valentin
“When we are attacked, then yes [I would fight], but when we are attacking other countries, then no,” he says.
Germany isn’t the only country looking for reinforcements, last month France announced a new military service for over-18s.
Currently, 10 EU countries already have compulsory military service.
While others like Belgium, the Netherlands and Germany are opting for voluntary schemes.
The German plan still must be signed off by parliament’s upper house later this month before it’s expected to start in January.
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