Scroll to section 2 for Tariffs' Effects.

Why did Donald Trump set new import tariffs?

• Bringing manufacturing to the US: encouraging local companies to produce more in the country.

• Protecting local industries:​encouraging consumers to buy more US-made goods by making them relatively cheaper.

• Cutting the trade deficit: reducing the gap between what the US imports and what it exports.

• Increasing state revenue: the US government earns money from higher import tariffs, especially short-term.

• Diplomatic pressure: the US uses (the threat of) tariffs against its trade partners to get political favours.

What tariffs are in place?

First, a baseline 10% tariff was set on all goods from 180+ countries.

In addition, there are 2 types of tariffs: (1) on specific industries, and (2) on specific countries.

Industries

Trump imposed 50% tariffs on steel, aluminium and copper, and a 25% tariff on cars, to protect them from foreign competitors and stimulate production. 

• Industry support: US steel, aluminium and heavy machinery sectors favoured the tariffs, but carmakers opposed them due to losing revenues from higher costs of imported materials and parts.

Countries 

The largest US trade partners initially faced tariffs above 10% (as high as 46%) but negotiated lower rates after agreeing to reduce trade barriers for US goods.

Current rates are 10% for the UK; 15% for the EU, South Korea and Japan; 20% for Vietnam and Taiwan, 25% for Mexico, 30% for China, 35% for Canada, 39% for Switzerland, and 50% for Brazil and India.

• Transshipment tariff: an extra 40% is applied to goods shipped through other countries to avoid tariffs, especially Chinese goods shipped through Vietnam and Mexico.

The UK negotiated a 25% tariff rate on steel and 10% on cars, compared with 50% and 25% respectively for other countries.

In exchange, the UK allowed increased imports of US beef and ethanol.

Mexico and Canada faced a 25% tariff rate, with the US accusing both of failures to stop drug trafficking and illegal migration.

• Canada’s rate was increased by another 10% after a Canadian politician sponsored an ad with an anti-tariff quote by Ronald Reagan: a former President from the Republican party (as is Donald Trump).

• 38% of Canadian imports and 50% of Mexican imports were later made exempt, in line with a 2020 trade agreement.

India faces a 50% tariff, as the US pressures its ally for buying Russian oil and military equipment. 

Brazil also faces a 50% tariff rate, linked to its support for BRICS, and the prosecution of the right-leaning former president Bolsonaro.

• Additional tariffs were removed for some​key imports like iron, beef, coffee, tropical fruit, and wood pulp. 

China

In March-May 2025, Trump raised the tariff rate for China from 20% to 145%, calling it the “worst offender” in global trade. Why?

• China manages its currency: the yuan is undervalued, making Chinese exports comparatively cheaper.

• Chinese companies get subsidies from the state, making them more competitive globally.

• Concerns of “dumping”: selling goods abroad at extremely low prices, damaging local producers.

• Non-tariff restrictions: China has laws and regulations preventing international firms from entering.

• Potential damage to communities affected by competition from Chinese goods and firms.

China hit back by raising tariffs on US goods to 125%.

Apple started moving iPhone production from China to India to reduce costs, similarly to some other companies. 

In May, the US and China reached a temporary deal:

The US cut the tariffs on China from 145% to 30%, and China cut its tariffs on the US from 125% to 10%. 

Later, China introduced tougher export restrictions on rare earths, critical to some US industries. 

• China refines 90% of all rare earths, including all of the world’s samarium, a rare earth metal used for F-35 fighter jets and missiles.

After negotiations, China paused its rare earth export controls, and the US suspended export restrictions on semiconductors, until November 2026.