What are Donald Trump’s tariffs, what will happen on ‘liberation day’ and how does it affect the UK?
If there is a word that has dominated Donald Trump’s second term, it’s tariffs.
Aluminium, steel, cars and champagne have all been in his firing line, while China, Canada and Mexico are the countries targeted with the heaviest costs.
But along the way, there have been threats, pauses and postponements.
His latest move was to announce a 25% tariff on all cars imported to the US.
So what are tariffs, what is in the pipeline – and what could all this mean for the UK?
What are tariffs and why is Trump threatening to use them?
Tariffs are taxes on goods imported into the US.
In his second term, Mr Trump has frequently used them – or the threat of them – as a trade weapon.
They were also part of his playbook in his first term, when he imposed taxes on most goods coming from China and used them as a bargaining chip to force Canada and Mexico to renegotiate a North American trade pact.
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Could Trump spark a trade war?
On his first day back in office, the US president promised 25% tariffs on all products coming into the US from its nearest neighbours Mexico and Canada – ostensibly to force the countries to tackle illegal migration and the smuggling of the synthetic opioid fentanyl to the US.
What is liberation day?
Mr Trump has branded 2 April “liberation day”, when he could unveil reciprocal tariffs on countries deemed to be giving the US a bad deal on trade.
The extent of potential tariffs and countries affected remains unclear.
Mr Trump has said he “may give a lot of countries breaks, but it’s reciprocal”, adding: “We might be even nicer than that.”
But he said additional tariffs are coming, including on lumber and semiconductor chips, and has previously promised tariffs on pharmaceuticals.
He has also threatened to impose 25% tariffs on any country that buys Venezuelan oil.
The latest car tariff is also due to come into force on 2 April.
What does the car tariff mean?
The car tariff would mean all cars imported into the US face a 25% tax.
It is the importers that buy the goods who pay the tariffs – therefore, American companies.
However, there is a knock-on effect: to compensate for tariffs, companies 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.
A similar tariff on car parts is expected to follow in May. This could prove even more complicated for American car makers, who source components from around the world even if the vehicle is made in the US.
But Mr Trump has insisted the move will “continue to spur growth”, pointing to plans from Hyundai – the South Korean car maker – to build a $5.8bn (£4.5bn) steel plant in Louisiana.
How will the car tariff affect the UK – and is it planning to negotiate a trade deal?
The tariff could have a huge impact on the UK’s car industry, including manufacturers such as Jaguar Land Rover, Aston Martin and Rolls-Royce.
Official data shows that the US is the UK car sector’s largest single market by country, accounting for £6.4bn worth of car exports in 2023 – 18.4% of the total.
The UK government has signalled it would not retaliate with a reciprocal tariff – despite pleas from British manufacturers to avoid the tariffs.
While Chancellor Rachel Reeves condemned the move, she told Sky’s Wilfred Frost: “We’re not at the moment in a position where we want to do anything to escalate these trade wars.”
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‘UK does not want a trade war with US’
Sky News understands the UK government is continuing to engage with the US on a trade deal and remains hopeful an agreement could be made before the tariffs come into force, but may retaliate if deemed necessary at a later date.
Ms Reeves seemingly alluded to the negotiations when she spoke to Sky News after the car tariff announcement.
“Trade wars are no good for anyone,” she said.
“It will end up with higher prices for consumers pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time, will make it harder for British companies to export.
“So look, we are looking to secure a better trading relationship with the United States. I recognise that the week ahead is important.
“There are further talks going on today, so let’s see where we get to in the next few days.”
Mr Trump has not explicitly said that the UK is in his sights for further tariffs.
Data shows no great trade imbalances – the gap between what you import and export from a certain country – and UK figures show no trade deficit with the United States.
UK ministers have previously suggested this could be good news for avoiding new levies.
What has the reaction been around the world?
There was swift condemnation of the car tariffs, especially from countries worst affected including Mexico, Canada, South Korea and Germany.
Listed European car and car parts manufacturers saw further steep declines in their share prices in trading after the plans were announced.
Canadian Prime Minister Mark Carney called it a “direct attack” on Canadian workers.
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Canadian PM: ‘Tariffs are an attack’
Even Trump advisor Elon Musk, the Tesla boss, admitted in a post on his X platform that the hit to his company would be “significant”.
“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” he wrote.
Which tariffs are already in place?
On 12 March, a 25% tariff on all steel and aluminium imports to the US came into effect, affecting UK products worth hundreds of millions of pounds.
The steel and aluminium tariffs are designed to protect US manufacturing and bolster jobs by making foreign-made products less attractive.
The move came after he placed a 10% tax on all imports from China, which he later doubled to 20%.
He placed 25% tariffs on Mexico and Canada, but paused them for a month two days after they came into effect.
They are now paused until “liberation day”.
The pause does not fully cover a tariff of 10% on Canadian energy products.
What was the global response to steel and aluminium tariffs?
The European Union has said it will impose retaliatory tariffs on the US, but when they will come into force is unknown.
The European Commission initially threatened to impose “countermeasures” affecting €26bn (£21.9bn) of US goods from 1 April, but later delayed this until the middle of April.
The bloc said the delay was because it wanted “additional time for discussions” with the US after Mr Trump threatened a 200% tariff on EU alcohol – including wine and champagne – if the bloc imposed duties on US whiskey.
Any tariffs imposed by the bloc would not only impact US steel and aluminium products, but also textiles, home appliances, agricultural goods and whiskey.
Canada’s finance minister also announced 25% retaliatory tariffs on US goods worth C$29.8bn (£16bn) that came into effect on the morning of 13 March.
The tariffs include steel products worth C$12.6bn (£6.8bn) and aluminium products worth C$3bn (£1.6bn) as well as computers, sports equipment and cast iron goods.
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Trump’s tariffs are ‘disappointing’
How did the UK respond to metal tariffs?
Sir Keir Starmer said he was “disappointed” by the global tariffs, but neither he nor Business Secretary Jonathan Reynolds would commit to an immediate retaliation, with discussions over a wider trade deal ongoing.
While the UK metal industry sees it as a direct attack, the reality is that this country is not a major player any more because energy costs, in particular, mean that UK-produced steel is expensive.
Nevertheless, stainless steel and some high-end products from the UK are in high demand and account for the bulk of the £350m in annual exports to the US.
Read more on tariffs:
It may be harder for the UK to trump metals tariffs
‘Canadianos’ and cancelled Vegas trips: How Canadians are acting with defiance
Why tariffs could cost you – even if Trump spares UK
Even if no tariffs are put on all UK exports to the US, consumers globally will still be impacted by the wider trade war, particularly in the US.
Economists believe that tariffs will raise costs in the US, sparking a wave of inflation that will keep interest rates higher for longer. The US central bank, the Federal Reserve, is mandated to act to bring inflation down.
More expensive borrowing and costlier goods and services could bring about an economic downturn in the US and have knock-on effects in the UK.
Forecasts from the National Institute of Economic and Social Research (NIESR) predict lower UK economic growth due to higher global interest rates.
It estimated that UK GDP (a measure of everything produced in the economy) could be between 2.5% and 3% lower over five years and 0.7% lower this year.
The Centre for Inclusive Trade Policy thinktank said a 20% across-the-board tariff, impacting the UK, could lead to a £22bn reduction in the UK’s US exports, with the hardest-hit sectors including fishing and mining.
Donald Trump has announced a 10% trade tariff on all imports from the UK – as he unleashed sweeping tariffs across the globe.
Speaking at a White House event entitled “Make America Wealthy Again”, the president held up a chart detailing the worst offenders – which also showed the new tariffs the US would be imposing.
“This is Liberation Day,” he told a cheering audience of supporters, while hitting out at foreign “cheaters”.
Follow live: Trump tariffs latest
He claimed “trillions” of dollars from the “reciprocal” levies he was imposing on others’ trade barriers would provide relief for the US taxpayer and restore US jobs and factories.
Mr Trump said the US has been “looted, pillaged, raped, plundered” by other nations.
Pic: AP
His first tariff announcement was a 25% duty on all car imports from midnight – 5am on Thursday, UK time.
Mr Trump confirmed the European Union would face a 20% reciprocal tariff on all other imports. China’s rate was set at 34%.
The UK’s rate of 10% was perhaps a shot across the bows over the country’s 20% VAT rate, though the president’s board suggested a 10% tariff imbalance between the two nations.
It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.
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Trump’s tariffs explained
The ramping up of duties promises to be painful for the global economy. Tariffs on steel and aluminium are already in effect.
The UK government signalled there would be no immediate retaliation.
Business and Trade Secretary Jonathan Reynolds said: “We will always act in the best interests of UK businesses and consumers. That’s why, throughout the last few weeks, the government has been fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.
“The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today.
“We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.
“Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”
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Who showed up for Trump’s tariff address?
The EU has pledged to retaliate, which is a problem for Northern Ireland.
Should that scenario play out, the region faces the prospect of rising prices because all its imports are tied to EU rules under post-Brexit trading arrangements.
It means US goods shipped to Northern Ireland would be subject to the EU’s reprisals.
The impact of a trade war would be expected to be widely negative, with tit-for-tat tariffs risking job losses, a ramping up of prices and cooling of global trade.
Research for the Institute for Public Policy Research has suggested more than 25,000 direct jobs in the UK car manufacturing industry alone could be at risk from the tariffs on car exports to the US.
The Society of Motor Manufacturers and Traders (SMMT) had said the tariff costs could not be absorbed by manufacturers and may lead to a review of output.
The tariffs now on UK exports pose a big risk to growth and the so-called headroom Chancellor Rachel Reeves was forced to restore to the public finances at the spring statement, risking further spending cuts or tax rises ahead to meet her fiscal rules.
Read more:
What do Trump’s tariffs mean for the UK?
The rewards and risks for US as trade war intensifies
A member of the Office for Budget Responsibility (OBR), David Miles, told MPs on Tuesday that US tariffs at 20% or 25% maintained on the UK for five years would “knock out all the headroom the government currently has”.
But he added that a “very limited tariff war” that the UK stays out of could be “mildly positive”.
He said: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.
“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”
Actors, directors and celebrity friends have paid tribute to Val Kilmer, after he died aged 65.
The California-born star of Top Gun, Batman and Heat died of pneumonia on Tuesday night in Los Angeles, his daughter Mercedes told the Associated Press.
She said Kilmer was diagnosed with throat cancer in 2014 but later recovered.
Tributes flooded in after reports broke of the actor’s death, with No Country For Old Men star Josh Brolin among the first to share their memories.
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Watch: Val Kilmer in his most iconic roles
He wrote on Instagram: “See ya, pal. I’m going to miss you. You were a smart, challenging, brave, uber-creative firecracker. There’s not a lot left of those.
“I hope to see you up there in the heavens when I eventually get there. Until then, amazing memories, lovely thoughts.”
Kyle Maclachlan, who co-starred with Kilmer in the 1991 biopic The Doors, wrote on social media: “You’ll always be my Jim. See you on the other side my friend.”
Michael Mann, who directed Kilmer in 1995’s Heat, also paid tribute in a statement, saying: “I always marvelled at the range, the brilliant variability within the powerful current of Val’s possessing and expressing character.
“After so many years of Val battling disease and maintaining his spirit, this is tremendously sad news.”
Heat co-star Danny Trejo also called Kilmer “a great actor, a wonderful person, and a dear friend of mine” on Instagram.
Cher, who once dated the actor, said on X that “U Were Funny, crazy, pain in the ass, GREAT FRIEND… BRILLIANT as Mark Twain, BRAVE here during ur sickness”.
Lifelong friend and director of Twixt, Francis Ford Coppola said: “Val Kilmer was the most talented actor when in his High School, and that talent only grew greater throughout his life.
“He was a wonderful person to work with and a joy to know – I will always remember him.”
The Top Gun account on X also said it was remembering Kilmer, who starred as Iceman in both the 1986 original and 2022 sequel, and “whose indelible cinematic mark spanned genres and generations”.
Nicolas Cage added that “I always liked Val and am sad to hear of his passing”.
“I thought he was a genius actor,” he said. “I enjoyed working with him on Bad Lieutenant and I admired his commitment and sense of humor.
“He should have won the Oscar for The Doors.”
World leaders have begun reacting after Donald Trump announced sweeping tariffs across the world.
Mr Tump announced a 10% trade tariff on all imports from the UK.
He said he would impose a 10% baseline tariff on all imports to the US and higher duties on some of the country’s biggest trading partners.
Speaking at a White House event entitled ‘Make America Wealthy Again’, the president held up a chart detailing the worst offenders, hitting at foreign “cheaters”.
These are some of the world leaders’ reactions.
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Trump’s tariffs explained
Irish Prime Minister Micheal Martin has said there is “no justification” for US tariffs.
“I deeply regret the US decision to impose 20% tariffs on imports from across the European Union,” the taoiseach added.
“We see no justification for this. More than €4.2bn worth of goods and services are traded between the EU and the US daily.
“Disrupting this deeply integrated relationship benefits no one. Tariffs drive inflation, hurt people on both sides of the Atlantic, and put jobs at risk.”
Read more:
Trump’s tariffs will have consequences – Ed Conway
UK reacts to Trump’s tariffs
Donald Trump holding the signed executive order. Pic: Reuters
Manfred Weber, the president of the largest party in the European Parliament, the EPP, said: “To our American friends, today isn’t liberation day – it’s resentment day. Donald Trump’s tariffs don’t defend fair trade; they attack it out of fear and hurt both sides of the Atlantic.
“Europe stands united, ready to defend its interests, and open to fair, firm talks.”
Canadian Prime Minister Mark Carney said his country would fight tariffs with countermeasures.
“It’s essential to act with purpose and with force, and that’s what we will do,” he told reporters ahead of a cabinet meeting to discuss Canada’s response.
Australian Prime Minister Anthony Albanese said: “It is the American people who will pay the biggest price for these unjustified tariffs.
“This is why our government will not be seeking to impose reciprocal tariffs. We will not join a race to the bottom that leads to higher prices and slower growth.”
Italian Prime Minister Giorgia Meloni, seen as close ally of the US president, called the tariffs “wrong” and said they would not benefit the United States.
“We will do everything we can to work towards an agreement with the United States, with the goal of avoiding a trade war that would inevitably weaken the West in favour of other global players,” she said.
The Spanish Prime Minister Pedro Sanchez vowed to protect the country’s companies and workers and to “continue to be committed to an open world.”
His Swedish counterpart, Ulf Kristersson, said: “We don’t want growing trade barriers.
“We don’t want a trade war.
“We want to find our way back to a path of trade and cooperation together with the US, so that people in our countries can enjoy a better life.”
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