Why has Trump slapped tariffs on the rest of the world - and how will it affect me? Everything you need to know about Donald's trade war and how it could play out

On Wednesday night, Donald Trump announced a sweeping scope of tariff measures connected overseas imports successful what helium called America’s ‘declaration of economical independence’.

The levies are expected to deed the UK and different countries that merchantability into the US, though immoderate volition consciousness the symptom much than others.

What is simply a tariff?

A tariff is efficaciously a taxation connected goods coming into a state from abroad. They are paid by the institution importing the items to the government.

Tariffs are usually acceptable astatine a percent of the worth of the imported goods. For example, a 10 per cent tariff connected a car worthy £30,000 would marque it £33,000.

This usually has the effect of making the goods much costly for consumers arsenic companies thin to walk connected the outgo of the tariff to their customers.

Because of their effect of pushing up the outgo of imports, tariffs are utilized to springiness home-grown industries an vantage implicit their overseas competitors that effort to participate the market.

What has Trump done?

In an announcement connected Wednesday, Trump revealed that each imports into the US from overseas volition beryllium taxable to a minimum tariff of 10 per cent from April 5.

But immoderate countries that export tons of goods to the US specified arsenic China are acceptable to beryllium deed with higher levies from April 9.

Chinese exports were slapped with a 34 per cent ‘reciprocal’ tariff by Trump portion the European Union faced a levy of 20 per cent connected its exports to the US.

The UK has managed to debar the worst of the measures, with its exports taxable to the minimum tariff of 10 per cent.

The caller levies mean the effectual tariff complaint for each US imports has surged to 22 per cent from conscionable 2.5 per cent past year, according to standing bureau Fitch, levels not seen since 1910.

Analysts astatine Australian concern slope Macquarie predicted the adjacent 12 months would spot ‘the largest summation successful tariffs recorded successful 200 years’ crossed the planetary economy.

Trump's adjutant Peter Navarro said the tariffs volition rise £4.5trillion for the US coffers, though a batch of the symptom is apt to autumn connected American shoppers and businesses.

What is Trump’s strategy?

Trump has said different nations person ‘ripped off’ the state for decades and that the tariff measures are designed to ‘make America affluent again’.

He has claimed that making it much costly to import goods into America volition unit companies to marque much of their products wrong the country. A US authorities authoritative said the levies would ‘restore American greatness and prosperity for mundane American workers successful their communities’.

White House unit person besides said the tariffs are designed to extremity ‘unfair commercialized practices’ betwixt the US and different countries, with Trump having repeatedly aimed to trim America’s commercialized deficit.

Additionally, it is hoped that the measures volition rise trillions of dollars that volition past beryllium utilized to assistance wage for heavy taxation cuts.

This extremity was alluded to by Trump connected Wednesday erstwhile helium bemoaned the instauration of the US national income taxation successful 1913, earlier which helium said tariffs were ‘the superior root of gross to tally the government’.

How volition this impact planetary trade?

President Trump has efficaciously upended 80 years of planetary economical commercialized argumentation – and the consequences volition beryllium felt acold and wide.

‘Trump's tariffs transportation the hazard of destroying the planetary escaped commercialized bid the United States itself has spear-headed since the Second World War,’ warns Takahide Kiuchi, enforcement economist astatine Nomura Research Institute.

Ric Deverell, main economist astatine Australian concern slope Macquarie, describes it arsenic ‘the biggest commercialized daze successful history’ with ‘significant consequences’ for commercialized and the economy.

In the archetypal instance, the interaction volition beryllium plain and elemental – higher prices. This successful crook volition deed request for goods – slowing economies and hitting planetary trade.

The longer-term interaction volition beryllium connected whether this escalates into a planetary commercialized warfare and for however long. Major exporters specified arsenic China volition beryllium forced to look for caller markets, portion the unravelling of proviso chains that kept a lid connected prices for years volition apt propulsion up inflation, hitting firm profits and wider surviving standards.

This raises the spectre of stagflation – a achy operation of precocious ostentation and anemic economical growth.

‘This is however you sabotage the world’s economical motor portion claiming to supercharge it,’ says Nigel Green, main enforcement of planetary fiscal advisory deVere Group.

‘It’s a seismic time for planetary trade. Trump is blowing up the post-war strategy that made the US and the satellite much prosperous, and he’s doing it with reckless confidence.’

What is the interaction connected the planetary economy?

The National Institute of Economic and Social Research (NIESR) estimates that the tariffs volition shave 2 per cent disconnected planetary maturation implicit the adjacent 5 years.

And a study by Aston University suggests it could hitch £1trillion disconnected the planetary system – fuelling fears that galore countries volition endure recession.

‘This is simply a game-changer, not lone for the US system but for the planetary economy,’ warns Olu Sonola, caput of US economical probe astatine Fitch Ratings. ‘Many countries volition apt extremity up successful a recession. You tin propulsion astir forecasts retired the doorway if this tariff complaint stays connected for an extended play of time.’

Analysis by Macquarie suggests the US system volition beryllium deed peculiarly hard – but volition not beryllium unsocial successful feeling the pain.

‘The tariffs volition person important consequences, with planetary maturation apt to dilatory considerably and the hazard of a US recession increasing,’ says Deverell. ‘Other economies, peculiarly those successful Asia, are besides apt to spot a important slowdown from the deed to exports.’

What volition the interaction beryllium connected the UK economy?

While the UK managed to debar immoderate of the higher tariffs imposed connected different US trading partners specified arsenic China and the EU, it has not escaped unscathed - with a 10 per cent levy connected each British exports to America.

The US is the UK’s largest export market, shipping implicit £60billion worthy of goods to America successful 2023, according to ONS data.

Sir Keir Starmer has warned ‘there volition beryllium an economical interaction from the decisions the US has taken some present and globally’.

He is right. The £60billion of goods the UK sends to the US each twelvemonth person conscionable go £6billion much expensive. This could deed request for goods stamped ‘Made successful Britain’ successful America.

NIESR estimates that Trump’s tariffs volition trim maturation successful the UK to conscionable 0.6 per cent this twelvemonth and adjacent to zero adjacent twelvemonth – good beneath the 1 per cent and 1.9 per cent pencilled successful by the Office for Budget Responsibility small implicit a week ago.

That is atrocious quality for embattled Chancellor Rachel Reeves.

The economical slowdown volition each but hitch retired the constricted £9.9billion of fiscal ‘headroom’ she near herself successful the Spring Statement – mounting the country for much taxation hikes oregon spending cuts (or both) successful the Budget this Autumn.

Jobs are besides astatine risk. The tariffs connected cars could mean arsenic galore arsenic 25,000 jobs are lost, according to the Institute for Public Policy Research.

Stephen Phipson, main enforcement of Make UK, describes the tariffs arsenic ‘devastating for UK manufacturing’, adding: ‘Not lone volition volumes of nonstop exports to the US diminution but it volition destruct decades of integrated proviso chains connecting the UK with the US done different trading partners.’

Which regions are worst hit?

The West Midlands and East of England nutrient much than 40 per cent of UK goods exported to the US each twelvemonth – immoderate £25billion worth.

Some 21.5 per cent of exports to the US travel from the West Midlands, with cars making up 49 per cent of that, according to investigation by PwC. Jaguar Land Rover and Aston Martin are some based successful the region.

The East of England makes up 19.6 per cent of UK exports to the US with medicine and pharmaceuticals products accounting for 30 per cent of sales.

Meanwhile, Scotland is liable for an eighth of exports to the US and the Scotch whisky manufacture employs 41,000 northbound of the border.

What volition the interaction beryllium connected UK consumers?

While the Government has said truthful acold that it volition not respond to the latest barrage of US tariffs, immoderate absorption volition origin symptom for consumers.

Prices of items specified arsenic Levi’s jeans, Jack Daniel’s and Jim Beam bourbon, and Harley-Davidson motorcycles could each summation if the UK imposes retaliatory tariffs connected US goods.

There is besides the hazard that the much wide outgo of doing concern astir the satellite volition summation arsenic proviso chains are disrupted, meaning galore firms could beryllium forced to enactment up prices for consumers to offset the interaction connected their bottommost line.

One imaginable upside is that British shoppers could spot little prices for immoderate goods arsenic countries crook to the UK arsenic an alternate destination for their wares to debar being stung by American tariffs.

What volition beryllium the interaction connected UK firms?

British firms astatine the crisp extremity of the tariff barrage see the UK’s car manufacture arsenic good arsenic pharmaceuticals and chemic companies.

Car manufacturers look an adjacent harsher complaint than the broad 10 per cent rate, with Trump having imposed a 25 per cent tariff connected each overseas car imports into the US.

Around £8.5billion worthy of vehicles were exported to the US from Britain successful 2023 alongside £8.8billion of aesculapian and pharma products.

Also successful the firing enactment are engineering and defence companies specified arsenic BAE Systems and Rolls-Royce, some of which marque a ample chunk of their wealth successful the US.

Rolls-Royce brought successful astir £5.5billion from the US past year, astir a 3rd of its full sales, portion BAE income to America were worthy £12.5billion successful 2024.

Shevaun Haviland, manager wide of the British Chambers of Commerce, noted that American firms had £700billion worthy of concern tied up successful Britain compared to £500billion successful the US from UK businesses.

‘No 1 volition flight the fallout from these decisions, determination volition beryllium an accrued hazard of commercialized diversion, and it volition wreak havoc connected concern communities crossed the world,’ she said.

There is besides a hazard that home-grown UK firms could beryllium crushed by an influx of cheaper goods from abroad, perchance costing thousands of jobs.

Barret Kupelian, main economist astatine PwC, besides highlighted that portion UK businesses faced little tariffs than their rivals successful the EU, immoderate of the symptom would ‘inevitably spill over’ owed to proviso concatenation links and shared markets.