What are Donald Trump's tariffs and how does it all affect the UK?

If there is a word that has dominated Donald Trump's second term, it's tariffs. 

Along the way, there have been threats, pauses and postponements, but 2 April - branded "Liberation Day" by the US president - was the day he finally revealed the extent of his promised tariffs.

So what are tariffs, what is being introduced, and what could all this mean for the UK?

What are tariffs?

Tariffs are taxes on goods imported into a country.

It is the importers buying the goods who pay the tariffs - therefore, in the case of the US, American companies.

Ultimately, the intent is to protect US manufacturing and bolster jobs by making foreign-made products less attractive.

But that can take time, with companies first having to put in place the infrastructure to produce their goods in the US.

There is also a knock-on effect for consumers. To compensate for tariffs, companies put up their prices, so customers end up paying more for goods.

Tariffs can also damage foreign countries as they make their products pricier and, therefore, harder to sell.

What happened on 'Liberation Day'?

Mr Trump branded 2 April "Liberation Day", promising to unveil the reciprocal tariffs on countries deemed to be giving the US a bad deal on trade.

And that's exactly what he did, saying the world would be hit with blanket 10% US tariffs - with 60 nations facing additional reciprocal tariffs.

In a speech in the White House rose garden, he held up a chart titled Reciprocal Tariffs and proceeded to compare tariffs imposed by other countries on the US against Washington's own new levies.

The sweeping tariffs included a 10% trade tariff on all imports from the UK.

He confirmed the European Union would face a 20% reciprocal tariff on all other imports. China's rate was set at 34%.

It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.

Here are some of the standout tariffs from the chart:

• China - 34%
• EU - 20%
• India - 26%
• UK - 10%
• Japan - 24%
• Australia - 10%
• Ukraine - 10%

The baseline 10% tariffs come into effect on 5 April, and the specific reciprocal tariffs for what Mr Trump called the "worst offenders" are set for 9 April.

Canada and Mexico were left off the chart for reciprocal tariffs, but Mr Trump had already announced 25% tariffs on them.

What tariffs have already been introduced?

Some tariffs have already come into effect, with Mr Trump confirming them in advance of 2 April. Here's a roundup:

• A 25% tariff on all cars imported to the US, with a similar tariff on car parts expected to follow in May;
• A 25% tariff on all imports from any country that buys oil or gas from Venezuela;
• A 25% tariff on all steel and aluminium imports to the US;
• A 10% tax on all imports from China, later doubled to 20%;
• 25% tariffs on Mexico and Canada, paused for a month and set to resume on 3 April.

How has the UK reacted?

After Mr Trump's 'Liberation Day' announcement, Sir Keir Starmer said the government was moving "to the next stage of our plan" after negotiations with the US failed to fend off any tariffs.

He promised any decisions "will be guided only by our national interest, in the interests of our economy, in the interests of businesses around this table, in the interests of putting money in the pockets of working people".

"Clearly, there will be an economic impact from the decisions the US has taken, both here and globally," he said.

"But I want to be crystal clear: we are prepared, indeed one of the great strengths of this nation is our ability to keep a cool head."

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."

He told Wilfred Frost on Sky News Breakfast his "job is not done" when it comes to negotiating a trade deal.

Mr Reynolds refused to say if the tariffs might cause a global recession and said the UK had safeguards in place to ensure it was not flooded with goods that would have gone to other countries.

"We'll take any powers we need to protect the British people and the British economy from that," he said.

"What we have directly within our power, alongside that is, of course, the ability to negotiate a better deal in the national interest for the UK. That's been our approach to date and we'll continue with that."

What impact could tariffs have on the UK?

The car tariff could be particularly problematic for the UK, as data shows 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.

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.

Read more on tariffs:
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What Sky correspondents make of Trump's tariff announcement

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.

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."

Even if no tariffs had been put on all UK exports to the US, consumers here were still expected to be impacted by the wider trade war.

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 is 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.

World reacts after hefty tariff announced

The UK got off lightly compared to the European Union, which has been handed a 20% tariff by Mr Trump.

As a result China announced that it will impose additional tariffs of 34% on all US goods from 10 April - matching the rate Mr Trump introduced on 2 April.

The Chinese foreign ministry said in a statement the US approach was "inconsistent with international trade rules, seriously infringing upon China's legitimate rights and interests, and is a typical unilateral bullying act".

The EU, which consists of 27 countries, has also vowed to retaliate.

European Commission president Ursula von der Leyen said on 3 April that Mr Trump's tariffs would have "dire consequences" for millions of people around the world - and that there seemed to be "no order in the disorder" of the actions of the US.

"Donald Trump's announcement of universal tariffs on the whole world, including the EU, is a major blow to the world economy," she said.

"I deeply regret this choice. The global economy will massively suffer and uncertainty will spiral. The consequences will be dire for millions around the world."

The EU last month announced €26bn of countermeasures against a range of US goods - scheduled to take effect later this month - in response to separate 25% tariffs on European steel and aluminium.

"We are already finalising the first package of countermeasures in response to tariffs on steel," said Von der Leyen on Thursday morning.

"We're now preparing for further countermeasures to protect our interests and our businesses if negotiations fail."

She added: "We will stand together, our unity is our strength."

Why is Trump so big on tariffs?

In his second term, Mr Trump has frequently used them - or the threat of them - as a trade weapon.

They are a key part of his efforts to reshape global trade relations, and he has imposed a swathe of what he calls "reciprocal" taxes that match tariffs levied by other nations.

Announcing the tariffs, 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.

He added the US had been "looted, pillaged, raped, plundered" by other nations.

Tariffs 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.

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 fentanyl crossing the border.

(c) Sky News 2025: What are Donald Trump's tariffs and how does it all affect the UK?