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The US president has promised to target countries which charge tax on US imports by matching them with a reciprocal tariff.

Donald Trump has ordered his team to start calculating duties by early April – increasing fears of a global trade war that could also accelerate US inflation.

“On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less,” he posted on Truth Social.

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What is America’s trade position?

It is set to spark negotiations with dozens of countries aimed at lowering their tariffs and trade barriers. The US wants to shrink its goods trade deficit which topped $1.2trn (£954bn) last year.

A White House official said that countries with large US trade surpluses could be targeted first. The top five are China, Mexico, Vietnam, Ireland and Germany, according to the US Census Bureau.

Trump’s total trade war


Paul Kelso - Health correspondent

Paul Kelso

Business and economics correspondent

@pkelso

Taken at face value Donald Trump’s embrace of reciprocal tariffs is a declaration of total trade war.

It 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.

The aim is 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 to simultaneously ease the US deficit and – in theory – price out imports in favour of domestic production.

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

It is a blow to the emerging view in Whitehall that Britain might wriggle through the chaos relatively unscathed.

Read more from Paul here.

UK government minister Pat McFadden told Sky News’ Politics Hub with Sophy Ridge that Britain will take a “wait and see” approach when it comes to the tariffs. He refused to say if the government would retaliate.

Trump latest: New tariffs signal ‘total trade war’

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The UK could be hit with tariffs as high as 24% if Mr Trump follows through on his threats to treat VAT as a tariff, according to Paul Ashworth, chief North America economist at Capital Economics.

Although some estimates are lower, he thinks Britain would be the fourth hardest hit, following India (29%), Brazil (28%) and the EU (25%).

This is based on VAT rates combined with existing tariffs, but the Trump administration also intends to take into account regulations, government subsidies, digital services taxation policies and exchange rate policies.

Read more from Sky News:
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“Most people would consider VAT to be a non-discriminatory tax since it is also applied to domestically-produced goods making a level playing field,” said Mr Ashworth.

But the US still argues that VAT is a form of discriminatory tariff because America applies a much lower average sales tax at state level.

India's Prime Minister Narendra Modi speaks as President Donald Trump listens during a news conference in the East Room of the White House, Thursday, Feb. 13, 2025, in Washington. (AP Photo/Ben Curtis)
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Narendra Modi and Donald Trump at the White House. Pic: AP

On Thursday, Mr Trump also held a meeting with Indian Prime Minister Narendra Modi, agreeing to join forces on artificial intelligence, semiconductors and strategic minerals.

During a news conference afterwards, Mr Trump said India has been “very strong on tariffs” and “it’s very hard to sell into India”, adding: “They’re going to be purchasing a lot of our oil and gas.”

India’s tariff rates are the highest, according to the World Trade Organisation, with a simple average 17% rate for all products compared to 3.3% for the US.

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Trump says he and Starmer will meet ‘very soon’

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Trump says he and Starmer will meet 'very soon'

Donald Trump has confirmed he will meet Sir Keir Starmer “very soon” after the prime minister “asked to come” to the US.

Mr Trump discussed details of his phone call with Sir Keir while taking questions from the media in the White House’s Oval Office on Friday.

“He asked for a meeting, and I agreed to the meeting,” the US president told reporters.

“We’re going to have a friendly meeting – very good.”

Donald Trump and Keir Starmer.
Pic:Reuters
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Donald Trump and Keir Starmer will meet ‘very soon’, the president indicated. Pic: Reuters

He added: “We have a lot of good things going on. But he asked to come and see me and I just accepted his asking.”

The date for their meeting is unknown. When pressed, Mr Trump said it will happen “very soon”.

“I think he wants to come next week… or the week after,” he added.

When asked by a reporter what they will discuss, Mr Trump said: “I don’t know. It was his request, not mine.”

“I met him twice already, we get along very well, he’s a very nice guy,” the president said of Sir Keir.

Sir Keir Starmer meets with the US Special Envoy to the UK, Mark Burnett and others. Pic: Instagram/USA in UK
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Sir Keir Starmer meets with the US Special Envoy to the UK, Mark Burnett and others. Pic: Instagram/USA in UK

The call between the president and prime minister is understood to have happened on Thursday during Sir Keir’s meeting with Mark Burnett, Washington’s special envoy to the UK.

The prime minister and Mr Burnett discussed the UK-US ‘special relationship’, and potential “further collaboration” on trade, technology, and culture.

An Instagram story for the US Embassy in London said that, during the dinner, President Trump called Mr Burnett, who “passed the phone to the PM”.

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A Downing Street spokeswoman said: “The prime minister was pleased to host President Trump’s special envoy to the United Kingdom, Mark Burnett, at Downing Street last night, during which he took a call from President Trump and discussed his forthcoming visit to the US.”

She added: “Mr Burnett and the prime minister agreed on the unique and special nature of the UK-US relationship, the strength of our alliance, and the warmth of the connection between the two countries.”

Sir Keir’s upcoming trip comes as the United Kingdom faces the potential threat of trade tariffs set by the US.

Mr Trump announced plans to impose “reciprocal tariffs” on all countries that impose extra costs on goods from the US, including countries which charge VAT on goods, like the UK.

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Risk of rising US prices could be biggest brake on Donald Trump’s tariff plan

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Risk of rising US prices could be biggest brake on Donald Trump's tariff plan

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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Fears Ukraine has been ‘betrayed’
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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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Donald Trump calls for Russia to return to G7 – as European defence minister warns NATO of ‘darkest times’ since WW2

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Donald Trump calls for Russia to return to G7 - as European defence minister warns NATO of 'darkest times' since WW2

Donald Trump has said he would love to have Russia return to the G7 group of advanced economies, and that expelling the country “was a mistake”.

Russia had been a member of the club of industrialised nations, then known as the G8, until it was excluded following its annexation of Ukraine’s Crimea region in 2014.

“I’d love to have them back. I think it was a mistake to throw them out. Look, it’s not a question of liking Russia or not liking Russia,” the US president said at the White House.

Follow latest: Trump presidency updates

During a series of fast-paced announcements, including a series of US trade tariffs, he also said he wants to discuss reducing defence spending with Russia and China, halve domestic defence expenditure and support moves towards getting rid of nuclear weapons.

The US president had already announced on Wednesday that he and Vladimir Putin would start peace talks “immediately” to end the war in Ukraine.

But much of Thursday’s focus on global defence and spending came after a fractious NATO meeting in Brussels.

It has been an intense 24 hours of diplomacy in Brussels, during which:

Ukraine’s president said his country must have a place at the negotiating table.

The Kremlin’s spokesman Dmitri Peskov said Ukraine would be involved in peace talks “one way or another”.

Donald Trump’s defence secretary Pete Hegseth reiterated the US vow to focus its military might away from Europe – telling NATO allies: “Trump won’t allow anyone to turn Uncle Sam into Uncle Sucker.”

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Uncle Sam ‘won’t be Uncle Sucker’

‘Make NATO great again’

Mr Hegseth told NATO allies that the US will not guarantee Europe’s security and pressured leaders to spend more on their militaries.

He told reporters “we must make NATO great again” as he called on allies to do “far more for Europe’s defence”.

In terms of military spending, as a proportion of a country’s GDP, the US defence secretary said: “2% is a start… but it’s not enough. Nor is 3%, nor is 4% – more like 5% – real investment, real urgency.”

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Will NATO countries cough up 5% of GDP?

Sky News’ US correspondent Mark Stone, who was listening to Mr Hegseth’s comments, said “he represents one man, Donald Trump, and he speaks for him”.

Stone points out that, whether people will like him or loathe him, he “is not a man who has experience in the forum he now finds himself in”.

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‘Ukraine is just the first stage’

In response to the Trump administration’s shift in policy, a European defence minister warned the continent will see its “darkest times since the Second World War” as Russia seeks to rearm and regroup following any peace deal.

Dovile Sakaliene, Lithuania’s defence minister, told reporters: “China and Russia are going to coordinate their actions and if we are not able to work together as a team for the democratic world, it is going to be the darkest times since the Second World War.

“In a few years, we will be in a situation where Russia – with the speed that it’s developing its defence industry and its army – is going to move forward.”

“We all understand that Ukraine is just the first stage currently of an imperial expansion of Russia.”

She added that NATO partners have a stark choice – rebuild their armed forces and defence industries “swiftly and very significantly” or find themselves “in a very difficult situation to put it diplomatically”.

Lithuanian Defense Minister Dovile Sakaliene speaks during a joint media conference with German Defense Minister Boris Pistorius at the Defense Ministry in Vilnius, Lithuania, Wednesday, Jan. 22, 2025. (AP Photo/Mindaugas Kulbis)
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Lithuania’s defence minister Dovile Sakaliene warns of dark days ahead. File pic: AP

Senior politicians in Moscow crowed over the thawing of relations between Russia and the US after presidents Trump and Putin held a 90-minute phone call on Wednesday.

Dmitry Medvedev, a former president and current security official, mocked Europe’s role on the world stage and said the continent is “mad with jealousy and rage” and that “Europe’s time is over”.

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