What are tariffs and how do they work? Why does Trump use them?

U.S. President Donald Trump has announced 35% tariffs on Canada starting August 1. He also announced new tariff rates in dozens of countries that will come into effect on August 7.

Since returning to office in January, Trump has introduced a series of such import taxes and threatened more.

He believes that tariffs promote U.S. manufacturing and protection efforts.

But his turbulent international trade policies have put the world economy in chaos, and as a result, the prices of many companies have increased the prices of American consumers.

Tariffs are taxes charged on goods purchased from other countries.

Often, they are a percentage of the value of the product.

A 10% tariff means $10 for products with $1 in tax on them – taking the total cost to the importer $11 (£8.35).

Companies that bring foreign goods to the United States must pay taxes to the government.

They may transfer some or all of the additional fees to the client. Businesses can also decide to import less goods.

In late May, the U.S. Trade Court ruled that Trump had no right to impose some of the tariffs he announced because he did so under national emergency powers.

But the next day, The Court of Appeal says related taxes can be retained The case continues.

Trump said the tariffs would encourage American consumers to buy more American-made goods, increase taxes and increase investment.

He wants to reduce the gap between the value of goods purchased from other countries and the value of goods sold to them – called the trade deficit. He believes that the United States has been exploited by “cheating” and foreigners.

The President declared different tariffs on specific goods and imported them from various countries.

Many of them are subsequently modified, delayed or cancelled.

Critics accuse Trump of making dramatic, sometimes contradictory policy statements a negotiated strategy to encourage trading partners to agree to benefit from U.S. deals.

Trump also made other demands along with the tariffs.

He said he currently has initial tariffs on China, Mexico and Canada, and he said the three countries must do more to prevent immigration and illegal drugs from reaching the United States.

On July 14th Trump threatens to inject major tariffs on companies dealing with Russiaif no agreement to end the Ukrainian war is reached within 50 days.

Taxes for imports to the United States include:

On July 8, Trump threatened to impose 200% tariffs on drug imports, but no other details have been confirmed.

Trump also said global tariff exemptions cover goods worth $800 or less Will end on August 29.

He has removed the so-called “Minimis” exemption for Chinese and Hong Kong products to limit Americans from Shein and Shein and Temu.

Subsequently, the earliest tariffs targeting China, Canada and Mexico were increased or delayed.

On April 2, Trump announced that a 10% “benchmark tariff” would apply to other imports from all other countries.

He said the White House called the goods of about 60 trading partners “the worst criminals”, including the EU and China, and would face higher interest rates because of the returns of unfair trade policies.

These “Mutual “Tariffs” It was later postponed for 90 days to allow time to negotiate a personal trade agreement, and then extended the deadline to August 1.

How many days are the deadline for August 1, US and EU agree European goods will face 15% tariffs – Including cars. According to the transaction – All 27 EU members need approval – The trading group will charge US companies 0% of the duties of certain products.

Other tariff rates that will now apply from August 7 include:

A 35% tariff will also apply Give all Canadian products In addition to existing responsibilities. This does not include products covered by the existing North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico.

But Trump delays imposing higher tariffs On all Mexican products – Make another 90 days of transaction. Earlier, Trump threatened to match interest rates of 30% or higher with any retaliation obligations introduced by U.S. imports.

United States-China trade negotiations are underway.

The two countries raised tariffs on each other’s goods to more than 100%, and then temporarily lowered interest rates within 90 days.

Then stopped It is scheduled to end on August 12.

Senior officials from the U.S. and China held talks earlier this week to extend the truce deadline.

China’s trade negotiator Li Changgang said that Beijing and Washington have agreed to promote a truce, and under this, both sides temporarily suspended some measures.

but U.S. Treasury Secretary Scott Bessent said Any extension will be decided by Trump.

At 10%, Britain has negotiated the lowest tariff rate in the United States so far.

UK exports About £58 billion in goods are provided to the United States in 2024mainly automobiles, machinery and medicines.

The 10% interest rate applies to the top 100,000 UK vehicles exported to the U.S. each year, which is about the number of cars sold in 2024. Each car above the quota will face a standard 25% car fee.

The agreement also allows the two countries to sell beef to each other – although the government insists that higher food safety standards in the UK will not change.

Some U.S. ethanol will face 0% tariffs, while the previous 19% rate will face 0% tariffs.

The two countries agreed to an initial framework in May. Trump announced in June that the deal was “completed” at the G7 summit in Canada.

However, he has not confirmed the expected steel import charges outlined in May for imports from the UK. Although the UK is the only country that does not have to pay a 50% tariff on steel and aluminum, there is still a 25% tariff.

Trump’s various announcements have caused volatility in the global stock market, with the company selling shares in its business. However, the market has become more stable lately.

Many people are affected by changes in stock market prices, even if they do not invest directly in stocks because of the promise impact on pensions, employment and interest rates.

The value of the dollar (often considered a safe asset) also sometimes drops sharply.

Both the International Monetary Fund (IMF) and the influential Organization for Economic Cooperation and Development (OECD) have lowered their forecasts for global economic growth in 2025, due to tariffs.

Both organizations expect the U.S. economy to be severely affected.

Latest figures show the U.S. economy Growing at an annual rate of 3% between April and June 2025After shrinking in the first three months of the year.

The president insists that his trade policy is working, but his own influential voice within the Republican Party attacks the measures along with opposition Democrats and foreign leaders.

Analysts say tariffs It has entered the total U.S. inflation ratewith some or all costs of the enterprise.

Prices rose 2.7% as of June, up from 2.4% last month, reflecting the rise in items such as clothing, coffee, toys and appliances.

Adidas It has been confirmed that it will increase prices for U.S. customers due to tariffs. Almost half of the company’s products are manufactured in Vietnam and Indonesia, facing taxes of 20% and 19% respectively.

Nike It also said that U.S. prices will rise, warning that tariffs could increase costs by $1 billion (£730 million).

Barbie manufacturer Mattel There are also plans to charge more fees in the United States.

Some companies choose to import less foreign goods, which can make available foreign goods more expensive.

The cost of goods produced in the United States using imported components is also expected to rise.

For example, auto parts often cross the U.S., Mexico, and Canada borders multiple times before fully assembling a vehicle.

The new tariffs also result in stricter customs inspections at the U.S. border, resulting in border delays.