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Taken at face value Donald Trump’s embrace of reciprocal tariffs is a declaration of total trade war, that would amount to perhaps the single biggest peacetime shock to global commerce.

In promising to levy import taxes on any nation that imposes tariffs or VAT on US exports, he is following through on a campaign promise to address a near trillion dollar trade deficit – the difference between the value of America’s exports and its imports – that he believes amounts to a tax on American jobs.

In response, he wants to deploy tariffs as an “external revenue service”, simultaneously easing the US deficit and, so the theory goes, pricing out imports in favour of domestic production.

Follow latest: Trump’s trading tariffs

With a promise to reestablish industries, from chip production lost to Taiwan, and car and pharmaceutical manufacturing to Europe, he is promising a country-by-country tailored assault on the status quo.

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Donald Trump unveils new tariffs for trading partners

Risk to Britain remains uncertain

His primary targets appear to be the major trading partners with whom the trading deficit is greatest.

Mexico and Canada, the European Union (whose 10% tariff on US cars is a particular irritation), as well as the ‘BRICS’ nations – Brazil, Russia, India (which imposes 9% tariffs on US imports), China and South Africa.

What it means for the UK will not be certain until the details are revealed in April, but it is a blow to the emerging view in Whitehall that Britain might wriggle through the chaos relatively unscathed.

To begin with, the US runs a trade surplus with the UK – in a quirk of statistics, the UK thinks it has a surplus too – and Brexit has placed it outside the EU bloc with the ability at least in theory to be more agile.

The UK also imposes direct tariffs on very few US goods following a deal in 2021, brokered by then trade secretary Liz Truss, that removed tariffs on denim and motorcycles bound for Britain, and cashmere and Scotch whisky heading the other way.

But we do add VAT to imports, and Mr Trump’s threat to treat the sales tax as a tariff by another name will chill British exporters.

Read more from Sky News:
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President Donald Trump listens as he meets with India's Prime Minister Narendra Modi in the Oval Office of the White House, Thursday, Feb. 13, 2025, in Washington. (Photo/Alex Brandon)
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Donald Trump accepts his tariffs will be inflationary for the US. Pic: AP

Tariffs set to raise prices in US

Analysts have estimated tariffs could add 21% to the cost of exports, amounting to a £24bn blow to national income.

Pharmaceuticals, cars, chemicals, scientific instruments and the aerospace industry – the main components of our £182bn US export trade – will all be potentially affected.

But the pain will certainly be shared.

Tariffs are paid by the importer, not the exporter, and even Mr Trump accepts they will be inflationary.

Rising prices on Main Street could yet be the biggest brake on the president’s tariff plan.

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How much of the White House is Trump demolishing?

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How much of the White House is Trump demolishing?

👉 Follow Trump100 on your podcast app 👈 

Donald Trump begins bulldozing much of the White House as his plans to build a mega ballroom begin – without planning permission, nor true clarity as to how it’s all being funded.

There are aesthetic questions, historical questions and ethical questions. We dig into what they are.

And – who is the young Democratic socialist about to become New York City’s first Muslim mayor? We tell you everything you need to know about Zohran Mamdani.

You can also watch all episodes on our YouTube channel – and watch David Blevins’ digital video on the White House ballroom here.

Email us on trump100@sky.uk with your comments and questions.

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Furious Trump cancels ‘all trade negotiations’ with Canada after TV advert

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Furious Trump cancels 'all trade negotiations' with Canada after TV advert

Analysis: Escalation will test Trump and Carney’s relationship

Trump turning once again on America’s closest ally Canada just proves how flippant his trade decisions are.

The smooth-talking confidence of Prime Minister Mark Carney persuaded Canadians to vote for him in this year’s election.

He certainly ran on a pitch to stand up to Trump, but his recent dealings with the US president have largely been diplomatic and cordial.

Carney was last in the Oval Office just over two weeks ago, and the pair laughed off Trump’s obsession with Canada becoming the “51st state”.

But now it’s a single advert from the government of Ontario that has triggered Trump to pause all trade talks between the two, calling its anti-tariff stance “egregious” on his social media platform Truth Social.

The advert uses Ronald Reagan’s voice to attack tariff policy – arguing trade barriers “hurt every American worker and consumer… markets shrink, and collapse, businesses and industries shut down and millions of people lose their jobs”.

But now, the Ronald Reagan Foundation has said the ad “misrepresents” his words – and they did not give their permission to use it.

Mere hours before Trump’s post, Carney was prodding Trump jokingly to bet on the outcome of the baseball World Series.

Given this latest escalation by the President tonight, their next interaction will be far from a laughing matter.

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Putin criticises Trump’s sanctions on oil firms – as Russian jets ‘briefly enter NATO airspace’

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Putin criticises Trump's sanctions on oil firms - as Russian jets 'briefly enter NATO airspace'

Vladimir Putin has described Donald Trump’s sanctions against two major oil firms as an “unfriendly act”.

However, the Russian president has insisted the tightened restrictions won’t affect the nation’s economy, a claim widely contradicted by most analysts.

In a major policy shift, Mr Trump imposed sanctions against Rosneft and Lukoil – Russia’s biggest oil companies – on Wednesday.

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Will US sanctions on Russian oil hurt the Kremlin?

The White House said this was because of “Russia’s lack of serious commitment to a peace process to end the war in Ukraine”.

Putin has now warned the move could disrupt the global oil markets, and lead to higher prices for consumers worldwide.

A meeting between the two leaders had been proposed in Budapest, but Mr Trump said he had decided to cancel the talks because “it didn’t feel right to me”.

Speaking from the Oval Office, he had told reporters: “I have good conversations. And then, they don’t go anywhere. They just don’t go anywhere.”

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Giving a speech in Moscow yesterday, Putin said “dialogue is always better than war” – but warned that Russia will never bow to pressure from abroad.

Earlier, his long-term ally Dmitry Medvedev had described Mr Trump as a “talkative peacemaker” who had now “fully embarked on the warpath against Russia”.

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Why did Trump sanction Russian oil?

Oil prices have witnessed a sizeable jump since the sanctions were announced, with Brent crude rising by 5% – the biggest daily percentage gains since the middle of June.

In other developments, Lithuania has claimed that two Russian military aircraft briefly entered its airspace yesterday.

A Su-30 fighter and Il-78 refuelling tanker were in the NATO member’s territory for 18 seconds, and Spanish jets were scrambled in response to the incident.

Russia’s defence ministry denied this – and said its planes did not violate the borders of any other country during a “training flight” in the Kaliningrad region.

Read more:
Sanctions could have chilling effect on market

How could new sanctions impact the UK?

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Zelenskyy tells Sky News ‘ceasefire is still possible’

Volodymyr Zelenskyy attended a European Council summit in Brussels to discuss the war in Ukraine – and said the meeting had delivered “good results”.

He said Ukraine had secured political support for frozen Russian assets and “their maximum use” to defend against Russian aggression, adding the EU would “work out all the necessary details”.

Mr Zelenskyy thanked the bloc for approving its 19th sanctions package against Russia earlier today, and work was already beginning on a 20th.

European leaders are going to arrive in London later today for a “critical” meeting of the “Coalition of the Willing” – with the goal of discussing “how they can pile pressure on Putin as he continues to kill innocent civilians with indiscriminate attacks across Ukraine”.

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How will the Russian oil sanctions affect petrol costs?

Prime Minister Sir Keir Starmer said: “The only person involved in this conflict who does not want to stop the war is President Putin, and his depraved strikes on young children in a nursery this week make that crystal clear.

“Time and again we offer Putin the chance to end his needless invasion, to stop the killing and recall his troops, but he repeatedly rejects those proposals and any chance of peace.

“From the battlefield to the global markets, as Putin continues to commit atrocities in Ukraine we must ratchet up the pressure on Russia and build on President Trump’s decisive action.”

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