What are tariffs and why is Trump using them?

US President Donald Trump has placed 125% tariffs on goods imported from China, leading Beijing to respond with an 84% tax on American products.

Trump had also brought high tariffs on dozens of other countries but these have been suspended for 90 days.

He argues that tariffs will boost US manufacturing and protect jobs, but the world economy has been thrown into chaos and prices are expected to rise for consumers.

Tariffs are taxes charged on goods bought from other countries.

Typically, they are a percentage of a product's value. The 125% tariff on Chinese goods means that a $10 product would attract a $12.50 tax on top - raising the total cost to $22.50.

The companies that bring the foreign goods into the country have to pay the tax to the government.

The money is collected when the imported goods clear US customs.

Firms can choose to pass on some or all of the increased cost to customers.

For decades, Trump has argued the US should use tariffs to boost its economy.

He says they will encourage US consumers to buy more American-made goods, increase the amount of tax raised and lead to huge levels of investment in the country.

Trump wants to reduce the gap between the value of goods the US buys from other countries and the value of those it sells to them. He argues that America has been taken advantage of by "cheaters" and "pillaged" by foreigners.

The US president has also made other demands alongside tariffs. The first announced during his current term targeted China, Mexico and Canada, after he said he wanted them to do more to stop migrants and illegal drugs reaching the US.

Trump has strongly defended his tariff policy but influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.

Since Trump's inauguration in January there has been a flurry of announcements on tariffs, with other countries scrambling to respond.

1 February: The president announces a 25% levy on Canadian and Mexican exports to the US - and an additional 10% on China

3 February: Mexico and Canada reach a deal to pause US tariffs for one month

10 February: Trump announces a 25% import tax on all steel and aluminium entering the US

4 March: The White House increases the tariff on Chinese imports to 20%

5 March: Trump temporarily exempts carmakers from the 25% tax imposed on Canada and Mexico

7 March: Trump expands the range of goods exempted from the Canada and Mexico tariffs

12 March: The 25% steel and aluminium tariffs take effect

26 March: The White House announces 25% duties on cars will apply from 2 April and on car parts at a later date but before 3 May

2 April: Trump says the US will impose "reciprocal tariffs" on certain countries, as well as a universal 10% levy on imports from all other countries, including the UK

5 April: The 10% tariffs take effect

9 April: Tariffs on roughly 60 countries - described by the US president as the "worst offenders" - are introduced. Trump then announces a 90-day pause for all countries, except China. The "baseline" 10% rate applies everywhere but China which faces 125% tariffs

10 April: China's retaliatory 84% levy on US goods takes effect. The EU says it will pause its planned US tariffs for 90 days

The current exemption for goods in small parcels sent from China worth less than $800 (£624) ends on 2 May. These will have a duty rate of 90% or $75 per item - increasing to $150 per item after 1 June.

The "baseline" 10% rate does not apply to Canada and Mexico. There have been a number of exemptions and delays since Trump announced they would face tariffs of 25% on most goods and 10% on Canadian energy.

The US currently runs a trade deficit with China. In 2024, the US imported far more from China ($440bn) than Beijing imported from America ($145bn).

In his first term as president, Trump imposed significant tariffs on China, which were retained and expanded by his successor Joe Biden.

Together those trade barriers helped to reduce the amount the US bought from China from 21% of America's total imports in 2016 to 13% in 2024.

However, China still ships everything from iPhones to children's toys to the US. Analysts have pointed out that some Chinese goods enter the US via other south-east Asian countries, which could mean they can avoid the 125% rate.

Many economists expect tariffs to push up prices across a range of imported goods, as firms pass on some or all of their increased costs.

The products affected could include everything from clothing to coffee and alcohol to electronics.

Some firms may also decide to import fewer foreign goods, which could make those which are available more expensive.

The price of goods manufactured in the US using imported components may also rise.

For example, car parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.

Car prices had already been expected to increase as a result of earlier tariffs, which remain in place.

The cost of a car made using parts from Mexico and Canada alone could rise by $4,000-$10,000 (£3,035 - £7,588) depending on the vehicle, according to analysts at the Anderson Economic Group.

Trump's tariffs announcements have caused significant volatility on global stock markets.

Stock markets are where firms sell shares in their business. They reflect the best guess of what every company in the world is worth and what their future profits will be.

Many people are affected by stock market price falls - even if they don't invest in shares directly - because of the knock-on effect on pensions, jobs and interest rates.

Share prices dropped sharply after the global tariffs were announce because investors thought they would increase costs and reduce profits. But after Trump announced the 90-day pause, US, Asian and European markets rebounded sharply.

The UK exported around £58bn of goods to the US in 2024, external, mainly cars, machinery and pharmaceuticals.

It was already due to be affected by the earlier tariffs targeting steel, aluminium and car imports.

Prime Minister Sir Keir Starmer said "clearly there will be an economic impact" from the 10% tariff. However, he said US-UK trade talks are ongoing, and that he will "fight for the best deal for Britain".

The UK government has so far not announced any taxes on US imports. However, it is drawing up a list of US products it could hit with retaliatory tariffs.

Following the announcement of tariffs, car maker Jaguar Land Rover said it would "pause" all shipments to the US as it worked to "address the new trading terms".

Economists have warned US tariffs could knock the UK's economy off course and make it harder for the government to hit its borrowing rules.

For countries on Donald Trump's so-called "worst offenders" list, there was a sigh of relief when tariffs were downgraded to 10%.

EU The European Commission President Ursula von der Leyen said Trump's decision was an "important step towards stabilising the global economy" and said the EU would pause its own retaliatory tariffs for 90 days.

Poland's Prime Minister Donald Tusk urged all parties to "make the best" of the 90 day pause, stressing that maintaining strong relations with the US "is a common responsibility of Europeans and Americans"

Vietnam's Deputy PM Ho Duc Phoc said that the US and Vietnam expect to start "negotiations on a bilateral trade agreement" which "would include tariff agreements"

Germany's incoming Chancellor Friedrich Merz said the pause proves a united European approach to trade has a positive effect, adding: "Europeans are determined to defend ourselves"

Canada, which has been targeted by tariffs above 10%, introduced a 25% tariff on some vehicles from the US on 9 April.