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

Published

5 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

Inside Iran’s notorious Evin Prison – as Tehran says damage shows Israel targeted civilians

Published

1 hour ago

July 4, 2025

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Inside Iran's notorious Evin Prison - as Tehran says damage shows Israel targeted civilians

It is one of the most notorious and secret places in Iran.

Somewhere foreign journalists are never allowed to visit or film. The prison where dissidents and critics of Iran’s government disappear – some never to be seen again.

But we went there today, invited by Iranian authorities eager to show the damage done there by Israel.

Evin Prison was hit by Israeli airstrikes the day before a ceasefire ended a 12-day war with Iran. The damage is much greater than thought at the time.

We walked through what’s left of its gates, now a mass of rubble and twisted metal, among just a handful of foreign news media allowed in.

A few hundred yards in, we were shown a building Iranians say was the prison’s hospital.

Behind iron bars, every one of the building’s windows had been blown in. Medical equipment and hospital beds had been ripped apart and shredded.

It felt eerie being somewhere normally shut off to the outside world.

On the hill above us, untouched by the airstrikes, the buildings where inmates are incarcerated in reportedly horrific conditions, ominous watch towers silhouetted against the sky.

Evin felt rundown and neglected. There was something ineffably sad and oppressive about the atmosphere as we wandered through the compound.

The Iranians had their reasons to bring us here. The authorities say at least 71 people were killed in the air strikes, some of them inmates, but also visiting family members.

Iran says this is evidence that Israel was not just targeting military or nuclear sites but civilian locations too.

But the press visit highlighted the prison’s notoriety too.

Iran’s critics and human rights groups say Evin is synonymous with the brutal oppression of political prisoners and opponents, and its practice of hostage diplomacy too.

British dual nationals, including Nazanin Zaghari-Ratcliffe were held here for years before being released in 2022 in exchange for concessions from the UK.

Interviewed about the Israeli airstrikes at the time, Ms Zaghari-Ratcliffe showed only characteristic empathy with her former fellow inmates. Trapped in their cells, she said they must have been terrified.

The Israelis have not fully explained why they put Evin on their target list, but on the same day, the Israeli military said it was “attacking regime targets and government repression bodies in the heart of Tehran”.

The locus of their strikes were the prison’s two entrances. If they were trying to enable a jailbreak, they failed. No one is reported to have escaped, several inmates are thought to have died.

The breaches the Israeli missiles made in the jail’s perimeter are being closed again quickly. We filmed as a team of masons worked to shut off the outside world again, brick by brick.

World

Gaza aid group reacts to claims American contractors fired at starving Palestinians

Published

13 hours ago

July 4, 2025

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Gaza aid group reacts to claims American contractors fired at starving Palestinians

Israeli-backed American contractors guarding aid centres in Gaza are using live ammunition and stun grenades as starving Palestinians scramble for food, an investigation has claimed.

The Associated Press has reported the accounts by two contractors from the Gaza Humanitarian Foundation (GHF), although the organisation has strongly denied the allegations, describing them as “categorically false”.

GHF was established in February to deliver desperately needed aid to people in the besieged enclave, but its work has been heavily criticised by international aid groups.

It has also been subject to intense scrutiny about its operations, which Sky News previously reported are associated with a significant increase in deaths.

AP’s claims, which have not been independently verified by Sky News, came from GHF contractors who spoke on condition of anonymity as they were revealing their employer’s internal operations.

They said they were motivated to speak out as they were disturbed by what they considered dangerous practices by security staff who were often heavily armed.

AP reported the contractors had claimed “their colleagues regularly lobbed stun grenades and pepper spray in the direction of the Palestinians” and “bullets were fired in all directions – in the air, into the ground and at times toward the Palestinians, recalling at least one instance where he thought someone had been hit”.

Contractor: ‘Innocent people being hurt’

“There are innocent people being hurt. Badly. Needlessly,” the contractor told AP.

Videos reportedly provided by one contractor show aid sites, located in Israeli military-controlled zones, with hundreds of Palestinians crammed between metal gates, scrambling to reach aid.

In the background, gunfire can be heard, and stun grenades are allegedly fired into crowds.

The footage does not show who was shooting or what was being shot at, but another video shows contractors in a compound, when bursts of gunfire can be heard. One man is then heard shouting in celebration: “Whoo! Whoo!”.

“I think you hit one,” another says, followed by the comment: “Hell, yeah, boy!”

The contractor who took the video told AP that colleagues were shooting in the direction of Palestinians.

According to the Hamas-run Gaza Health Ministry and witnesses, several hundred people have been killed and hundreds more wounded since the GHF sites started operating more than a month ago, amid claims by Palestinians of Israeli troops opening fire almost every day at crowds seeking to reach the aid.

In response, Israel’s military says it fires only warning shots and is investigating reports of civilian harm. It denies deliberately shooting at any innocent civilians and says it’s examining how to reduce “friction with the population” in the areas surrounding the distribution centres.

GHF attacks ‘false claims’

GHF has vehemently denied the accusations, adding that it has investigated AP’s allegations.

In a statement on X, GHF wrote: “Based on time-stamped video footage and sworn witness statements, we have concluded that the claims in the AP’s story are categorically false. At no point were civilians under fire at a GHF distribution site.

“The gunfire heard in the video was confirmed to have originated from the IDF, who was outside the immediate vicinity of the GHF distribution site.

“It was not directed at individuals, and no one was shot or injured. What is most troubling is that the AP refused to share the full video with us prior to publication, despite the seriousness of the allegations.”

Safe Reach Solutions, the logistics company subcontracted by GHF, told the AP there have been no serious injuries at any of their sites to date.

But the organisation admitted that, in isolated incidents, security professionals fired live rounds into the ground and away from civilians to get their attention.

A Safe Reach Solutions spokesperson told AP this happened at the start of their operations at “the height of desperation where crowd control measures were necessary for the safety and security of civilians”.

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Liverpool football star Diogo Jota killed in car crash

Published

19 hours ago

July 4, 2025

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Liverpool football star Diogo Jota killed in car crash

Liverpool star Diogo Jota has died in a car crash.

The 28-year-old Portuguese forward died in the accident in the early hours of Thursday morning near Zamora, in northwestern Spain.

His brother, Andre Silva, was also killed in the crash on the Rias Bajas Highway (A-52) near Palacios de Sanabria, heading towards Benavente.

Follow the latest updates following Diogo Jota’s death

Jota and Silva were driving to Santander to catch a ferry back to England ahead of the start of Liverpool’s pre-season training on Monday, CNN Portugal reports.

The news outlet reports that Jota was advised against flying back to England due to recent surgery.

Police said the accident happened at 12.30am when the Lamborghini the pair were travelling in veered off the road.

“A vehicle left the road and everything indicates a tyre burst while overtaking,” the Guardia Civil in Zamora told Sky Sports News in a statement.

“As a result of the accident, the car caught fire and both people were killed. Pending the completion of forensic tests, one of the deceased has been identified as Diogo Jota, a Liverpool FC player, and his brother, Andre Felipe.”

A Spanish government source told the PA news agency that police were investigating the crash as “a possible speeding incident”.

Police added that no other vehicles were involved in the incident.

Pictures of the aftermath of the crash showed debris scattered along the side of the road, including what appeared to be charred parts of the vehicle.

It comes just 10 days after the player married his long-term girlfriend, Rute Cardoso.

He had three children.

The footballer, who played as a striker for Liverpool, began his career in his native Portugal and played at Atletico Madrid in Spain before moving to England.

He joined the Merseyside club from Wolverhampton Wanderers in 2020.

Jota played an important role throughout his five years with the Reds, including scoring six times in Liverpool’s recent Premier League-winning season.

He scored a total of 47 times in 123 matches for the club. He also played 49 times for the Portugal national side, scoring 14 times.

Silva, 25, played for Penafiel, a Portuguese second division club.

Teammates and football legends pay tribute

A statement issued by Liverpool FC said the club was “devastated” by their player’s death.

“The club have been informed the 28-year-old has passed away following a road traffic accident in Spain along with his brother, Andre,” the club said in a statement.

“Liverpool FC will be making no further comment at this time and request the privacy of Diogo and Andre’s family, friends, teammates and club staff is respected as they try to come to terms with an unimaginable loss.

“We will continue to provide them with our full support.”

The Portuguese football federation said it was “utterly devastated by the deaths”.

“Far beyond being an exceptional player, with nearly 50 caps for the national team, Diogo Jota was an extraordinary person, respected by all teammates and opponents, someone with a contagious joy and a reference within his own community.

“We have lost two champions. The passing of Diogo and Andre Silva represents irreparable losses for Portuguese Football, and we will do everything to honour their legacy daily.”

The Portugal and Spain women’s teams held a minute’s silence for Jota and Silva before their match in the Women’s Euros in Switzerland on Thursday evening.

It came after Liverpool’s manager Arne Slot said in a statement: “What can anyone say at a time like this when the shock and the pain is so incredibly raw? I wish I had the words but I know I do not.

“All I have are feelings that I know so many people will share about a person and a player we loved dearly and a family we care so much about.

“My first thoughts are not those of a football manager. They are of a father, a son, a brother and an uncle and they belong to the family of Diogo and Andre Silva who have experienced such an unimaginable loss.”

Jota’s former manager at Liverpool, Jurgen Klopp, offered his thoughts in a post on Instagram.

“This is a moment where I struggle! There must be a bigger purpose, but I can’t see it,” he said.

“I’m heartbroken to hear about the passing of Diogo and his brother Andre. Diogo was not only a fantastic player, but also a great friend, a loving and caring husband and father.

“We will miss you so much. All my prayers, thoughts and power to Rute, the kids, the family, the friends and everyone who loved them.”

Liverpool captain Virgil van Dijk posted on Instagram: “What a human being, what a player, but most importantly what an unbelievable family man.

“You mean so much to all of us and you always will!”

Cristiano Ronaldo, Jota’s captain in the national team, said: “It doesn’t make sense. Just now we were together in the National Team, just now you had gotten married.

“To your family, your wife, and your children, I send my condolences and wish them all the strength in the world.

“I know you will always be with them. Rest in Peace, Diogo and Andre. We will all miss you.”

Jota’s Liverpool teammates Darwin Nunez, Cody Gakpo and Dominik Szoboszlai have also paid tribute.

Szoboszlai wrote: “Words cannot describe how heartbroken and devastated we are… Your smile, your love for the game will never be forgotten.

“We will miss you so much, but you will stay with us forever, on and off the pitch.”

Jota’s former teammates Trent Alexander-Arnold, Sadio Mane, Roberto Firmino and Thiago Alcantara have also shared messages on social media.

Mane posted a picture of himself and Jota with heartbreak emojis.

It came as Liverpool legend Kenny Dalglish wrote on X: “You feel helpless, knowing there’s so little we can do to ease the pain for his wife of just two weeks, his three beautiful children.”

Liverpool legend Steven Gerrard shared an image of Jota on Instagram and wrote: “Condolences to his family and friends during this incredibly sad time.”

Liverpool owners Billy Hogan, John Henry and Tom Werner, who are part of the Fenway Sports Group, said: “This tragic situation and the reality of it is truly shocking, devastating and has left us numb with grief.”

Football icon Lionel Messi has also paid tribute, sharing an image of Jota on Instagram with the message “QEPD” – short for the Spanish phrase ‘que en paz descanse’, which translates to “may he rest in peace'”.

European football clubs such as Barcelona and AC Milan have also shared messages, along with basketball player LeBron James and tennis icon Rafael Nadal.

Meanwhile Liverpool FC have opened a physical and digital book of condolence for supporters and members of the public to sign.

The physical book is at the club’s stadium, in the Anfield Road Stand reception area until Sunday evening.

An avid video gamer, Jota also owned an eSports team and regularly streamed on Twitch.