Donald Trump has vowed to impose tariffs on countries that charge VAT, leaving Britain at risk of a £24bn blow to its economy.
The US President issued the warning on Thursday as he laid out his plan for reciprocal tariffs.
He said: “I’ve decided for purposes of fairness that I will charge a reciprocal tariff. It’s fair to all. No other country can complain.”
It is not yet clear whether Britain will be specifically singled out by Mr Trump, as the US vowed to address “each country one by one”.
The UK Government will no doubt seek to negotiate to avoid tariffs, which could lead to a 21pc levy on goods exports to the US if the President targets Britain’s VAT charges.
Mr Trump said tonight that he views VAT - as imposed by the UK - as an unfair trade barrier.
“We’re going to call it a tariff,” he told reporters.
George Saravelos, the global head of FX Research at Deutsche Bank, said earlier this week that if the US imposed duties based on tariff policy and VAT combined, UK exporters to the US would face extra charges of 21pc, Mr Saravelos said.
The classification of VAT as a tariff makes Donald Trump’s policy “much more damaging” for countries like the UK.
Tariffs of this scale would knock 0.4 percentage points off UK GDP growth for the next two years, according to Ahmet Kaya, of the National Institute of Economic and Social Research (Niesr), accounting for $30bn (£24bn).
The Government should avoid a trade war that “could easily spiral out of control”, a group representing over 50,000 UK businesses has warned.
William Bain, of British Chambers of Commerce, said it was “vital that the UK Government does not get sucked into a trade war of tit-for-tat tariffs, which could easily spiral out of control”.
Pat McFadden, a senior minister, told Sky News that the UK was an “open trading economy” and said that he thought retaliation against Mr Trump’s plans would be “premature”.
It is understood that the tariff increases are to be customised for each country by April 1, with the partial goal of starting trade new negotiations.
Mr Trump said that he wanted a level playing field for US companies and that his tariff plan will count tariffs, VAT and others of being worthy of reciprocation.
“Whatever they charge us we will charge them,” he said.
Earlier, Mr Trump wrote on his Truth Social platform: “Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!!
“Make America great again!!!”
The EU was last week scrambling to cut taxes on American cars in an effort to appease the US president and avoid the impact of like-for-like levies.
Britain has not yet signed a free trade agreement with the United States.
Read the latest updates below.
11:46 PM GMT
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11:44 PM GMT
US to increase military sales to India
The United States will increase military sales to India starting in 2025 and will eventually provide F-35 fighter jets, US president Donald Trump said on Thursday.
Addressing a joint news conference after a meeting with Indian prime minister Narendra Modi, Mr Trump also said the countries had struck an agreement that includes India importing more US oil and gas to shrink the trade deficit between the two countries.
11:37 PM GMT
Modi says US and India target $500 billion bilateral trade by 2030
Indian prime minster Narendra Modi has said that the United States and India have set a target of doubling their bilateral trade to $500bn (£398bn) by 2030.
Mr Modi made the comment after a summit meeting with Donald Trump in Washington. Mr Modi said the US and India would work together on artificial intelligence and semiconductors.
11:25 PM GMT
Modi seeking US trade agreement ‘very soon’
Indian premier Narendra Modi has said he is seeking a new trade agreement with the US “very soon”.
The two countries will also work on establishing strong supply chains for key minerals.
Mr Modi has been in discussions with Mr Trump at the White House this evening.
11:19 PM GMT
Wall Street rises amid Trump’s ‘opening gambit’ on trade
Wall Street took Donald Trump’s latest tariff move to be “a classic Trump move”, market strategist Stephen Innes has said .
Mr Innes, of SPI Asset Management, said that the market saw it as “an opening gambit to extract concessions, much like his previous playbook with Mexico and Canada, rather than an outright commitment to a full-scale tariff war.”
He added: “Say what you will about Trump, but when it comes to the art of the deal, he knows how to play the game better than any president in modern history. That’s not to say traders should start making assumptions—predicting Trump’s next move with certainty is a fatal flaw.
“But one thing is clear: by not pulling the trigger immediately, he’s left the door wide open for the worst offenders - those slapping the heaviest tariffs on US goods - to step up with counteroffers or, at the very least, start waving some olive branches. India, for example, will likely ramp up purchases of U.S. oil as the trade chessboard shifts.
“With Trump’s tariff threats looming, some countries are already looking to make strategic moves to stay in his good graces—or at the very least, avoid getting hit with the next wave of duties. India, a major crude importer, has long sought to diversify its energy sources, and given the geopolitical tightrope it walks between the U.S., Russia, and the Middle East, securing more American crude could be a smart hedge.”
10:44 PM GMT
Trump strategy could drive down tariffs, says ex-trade negotiator
Donald Trump’s planned tariff hike could actually end up reducing them, a former US trade negotiator has said.
Tiffany Smith, of the National Foreign Trade Council, said: “It’s a relief that the administration isn’t rushing to impose new tariffs, and we welcome the president taking a more nuanced, inter-agency approach.
“Ideally, this process will result in us working with our trading partners to lower their tariffs and trade barriers as opposed to increasing our own.”
Ms Smith previously led industrial goods market access negotiations for nine free trade agreements while working at the US Trade Representative.
Mr Trump, who took office on Jan 20, has already announced tariffs on all steel and aluminium imports beginning on March 12, imposed 10pc tariffs on goods from China, and put a 30-day hold on planned tariffs on goods from neighbouring Canada and Mexico.
The US president said on Monday he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals. On Thursday he said car tariffs would be coming soon.
“This is beyond negotiation. It’s to be taken very seriously,” said Josh Lipsky, director of the Atlantic Council’s GeoEconomics Center and a former adviser to the International Monetary Fund who also served in the Obama White House.
“I do think every country has been put on notice. And if you were going to implement reciprocal tariffs on the scale he’s talking about, this is actually how you would go about it,” he said.
10:23 PM GMT
Trump tariffs based on ‘fundamental misunderstanding’ of economics, says think tank
The United States does have low average tariffs, but Donald Trump’s proclamation tonight would seem designed to jack up taxes on imports, rather than pursue fairness, a trade specialist has said.
Scott Lincicome, a trade expert at the Cato Institute, a libertarian think tank in Washington DC, pointed out that the US, like other countries also has regulatory restrictions that limit foreign products.
“It will inevitably mean higher tariffs, and thus higher taxes for American consumers and manufacturers,” he said. Mr Trump’s tariffs plan “reflects a fundamental misunderstanding of how the global economy works.”
10:10 PM GMT
Trump says US ‘only going to get closer’ to India
Donald Trump welcomed Indian premier Narendra Modi to the Oval Office on Thursday afternoon, calling him a “great friend”. It came after hours after the US president announced plans for fresh tariffs, which affects American trading partners around the world, including India.
“We have great friendship, he and I and our countries, and I think it’s only going to get closer,” Mr Trump said.
Modi spent his time before arriving in Washington talking up his warm relationship with Mr Trump during his first term while cheering his winning back the White House. The Indian leader was looking to improve relations with Washington and the West overall, which have been frosty lately after Modi refused to condemn Russia for its war on Ukraine.
“The world had this thinking that India somehow is a neutral country in this whole process,” Mr Modi said, praising Mr Trump for speaking with Russia and Ukraine’s leaders on Wednesday. “But this is not true. India has a side, and that side is of peace.”
09:47 PM GMT
Trump presses Modi on tariffs
India’s prime minister Narendra Modi met Donald Trump and Elon Musk in Washington this evening, with the US president pressing the leader of the world’s most populous nation on tariffs and trade.
Mr Modi’s visit to the US capital started with a headline-grabbing encounter with billionaire tycoon Musk, who has launched an aggressive effort as Trump’s right-hand man to overhaul the federal bureaucracy.
Mr Modi then arrived for talks at the White House, hoping to rekindle the bromance he established with Trump in the US president’s first term.
But Mr Trump, who has launched his second presidency with a global trade war and announced reciprocal tariffs on all countries shortly before Mr Modi’s visit, had a warning.
“India, traditionally, is the highest, just about the highest tariff country. They charge more tariffs than any other country. And I mean, we’ll be talking about that,” Mr Trump told reporters in the Oval Office.
“India is a very hard place to do business because of the tariffs.”
White House officials said Mr Trump and Mr Modi would be aiming for a “fair” trade deal between their countries - a long-sought goal - this year, as well as a new defence partnership and military sales.
“There’s a lot of natural warmth dating back to President Trump’s first term,” a senior Trump administration official said.
But the official said that while there was “early body language from the government of India that has been well received,” they were “modest steps” and there remained “a lot more work to do.”
09:41 PM GMT
Britain already has ‘balanced trade’ with US, says business group
A trade association representing companies doing business in both the US and UK has said that Britain’s “relatively open market and balanced trade with the USA” could help it avoid most of the impact of Donald Trump’s tariffs.
Duncan Edwards, head of BritishAmerican Business, said: “The policy announced today to seek tariff reciprocity with countries that the US trades with should not come as a surprise, as this has been a long-held view of the President and those close to him.
“The US has long been one of the world’s most open markets for exporters, and many countries with which the US has a trade deficit have higher tariff and non-tariff barriers than the US currently is allowed to impose on them under WTO rules.
“Many people close to the President believe this is unacceptable. Exactly how the reciprocal tariff will be calculated, and whether it includes charges like VAT and Digital Services Taxes, will be the focus of much attention in Treasuries around the world.
“Our hope at BritishAmerican Business, is that the UK’s relatively open market and balanced trade with the USA gives it a chance to avoid much of the impact of this policy but nothing should be taken for granted.”
The White House pledged tonight to take action against countries that impose VAT on American imports. The UK has imposed VAT since 1973, the year it joined what became the European Union.
09:34 PM GMT
China could benefit from Trump tariffs, says political scientist
Donald Trump’s muscular trade policies could help China raise improve its popularity globally, a specialist on Chinese foreign policy has suggested.
Ja Ian Chong, a political scientist at the National University of Singapore, told Bloomberg: “Trump’s actions will certainly make it easier for Xi to win over poorer and less developed parts of the world.”
Winning over richer nations will require more effort, he said. “Just because one actor is problematic does not automatically make another less so.”
It comes after China’s reputation has taken a hit in recent years amid worries over its intentions towards Taiwan, its crackdown in Hong Kong and military manoeuvres in a disputed area of the South China Sea.
09:11 PM GMT
Wall Street rallies near a record after shrugging off Trump’s latest tariff threat
US stocks rallied to the brink of a record after more companies reported fatter profits than expected.
The S&P 500 rose 1pc. It got within less than 0.1pc of its all-time high as Wall Street shrugged off the latest announcement on tariffs by Donald Trump, which may not take full effect for some time.
The Dow Jones Industrial Average climbed 0.8pc, and the Nasdaq Composite rallied 1.5pc.
MGM Resorts, GE HealthCare and Molson Coors helped lead the way following their profit reports.
09:02 PM GMT
New tariffs could begin on April 2
Howard Lutnick, the US commerce secretary, told reporters this evening that reciprocal tariffs could be implemented as quickly as April 3.
“Our studies should be all complete by April 1. So we’ll hand the president the opportunity to start on April 2,” he said, saying that countries could avoid them by cutting their own tariffs.
08:44 PM GMT
White House says trade situation is ‘untenable’
The White House has pledged to “trade relationships with trading partners” even as it prepares to impose sweeping new tariffs across the world.
In a memo justifying its decision to impose reciprocal tariffs it said that the status quo was “untenable”.
It said: “The United States has one of the most open economies and has among the lowest average weighted tariff rates in the world. The United States imposes fewer barriers to imports than other major world economies, including those with similar political and economic systems.
“For many years, the United States has been treated unfairly by trading partners, both friend and foe. This lack of reciprocity is one source of our country’s large and persistent annual trade deficit in goods - closed markets abroad reduce United States exports and open markets at home result in significant imports.
“Our workers and industries bear the brunt of unfair practices and limited access to foreign markets... This situation is untenable. The trade deficit of the United States threatens our economic and national security, has hollowed out our industrial base, has reduced our overall national competitiveness, and has made our Nation dependent on other countries to meet our key security needs.
“By making trade more reciprocal and balanced, we can reduce the trade deficit; grow the United States economy; and improve our trade relationships with trading partners to the benefit of American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.
08:30 PM GMT
Trump says TikTok deadline could be extended
Donald Trump has told reporters that his his 75-day delay in enforcing a ban on the popular short-video app TikTok could be extended.
In remarks in the Oval Office, Trump said he still hopes to make a deal on TikTok to keep the app alive and that he will make it worthwhile for China to approve a sale.#
Last April, the US Congress passed a law providing a nine-month deadline for ByteDance to sell TikTok or the app would be banned across the United States.
The Biden administration had argued that TikTok poses a national security risk due to its connections to China.
But last month, with no sale planned, Mr Trump delayed the ban. He said: “I would like the United States to have a 50pc ownership position in a joint venture.”
08:17 PM GMT
VAT is ‘not a tariff’, says US tax think tank
VAT “is not a tariff” and is “trade neutral”, a centre-Right Washington think tank has said.
The Tax Foundation said: “Historical evidence and recent studies show that tariffs are taxes that raise prices and reduce available quantities of goods and services for US businesses and consumers, which results in lower income, reduced employment, and lower economic output.”
08:12 PM GMT
Trump: ‘Everybody took advantage of the United States’
“We had a very unfair system to us,” Mr Trump said as he signed his reciprocal tariffs order this evening.
Higher tariffs would be paid by US consumers and businesses, either directly or in the form of higher prices. The White House has treated these tariffs as a tool to negotiate new trade deals as well as a way to raise government revenues.
If other countries retaliate and the tariffs stay in place, most economists say growth would suffer and inflationary pressures would intensify.
08:07 PM GMT
News tariffs to be imposed in ‘Trump time’
Donald Trump’s trade team are developing plans for reciprocal tariffs on a country-by-country basis.
The FT reported that the tariffs will be issued in “Trump time”, an official said, “which is to say very rapidly”.
“This should be a matter of weeks, or in a few months,” he added.
07:55 PM GMT
UK to ‘wait and see’ if US tariffs actually happen, says minister
The Government will “wait and see” whether fresh US tariffs, potentially hitting the UK, “actually come to pass”.
Pat McFadden, one of Sir Keir Starmer’s most senior ministers, told Sky News that the Government would “wait and see what it means, it’s the best reaction to everything over the last month.
“Sometimes tariffs are announced, a couple of days later, they are unannounced.”
07:41 PM GMT
UK businesses warns over ‘tit-for-tat’ trade war
The Government should avoid a trade war that “could easily spiral out of control”, a group representing over 50,000 UK businesses has warned.
William Bain, head of trade policy at the British Chambers of Commerce, said: “These new proposals for reciprocal and differential tariffs will create more cost and uncertainty for investors, businesses and consumers across the world.
“Plans to factor in countries’ VAT regimes could lead to especially complex and costly tariff scenarios which upend established trade norms.
“It is vital that the UK Government does not get sucked into a trade war of tit-for-tat tariffs, which could easily spiral out of control.
“It will need to adopt a flexible and agile response, while assessing the reaction of other major players.
“But it must make the most of the time available before the introduction of these tariffs to negotiate with the US on alternative arrangements.
“If they do not, then sectors such automotives, pharmaceuticals, and food and drink could be significantly hit as higher tariffs inevitably feed through into globally higher prices for consumers.”
07:37 PM GMT
Consumer prices could go up, admits Trump
US consumers could face higher prices, the US president has admitted.
Mr Trump, who campaigned on a pledge to bring down consumer prices, said prices could go up in the short term as a result of his trade policies.
“Tariffs are great,” he said.
07:37 PM GMT
White House open to cutting tariffs with countries that cut theirs
The US is hoping to launch trade negotiations with some countries and would be open to tariff cuts, the White House has said.
Donald Trump’s announcement tonight designed at least in part to trigger talks with other countries.
A White House official said: “The president is more than happy to lower tariffs if countries want to lower tariffs. But let’s also recognise that tariffs, higher tariffs, are not the biggest part of the problem in many, if not most cases.”
The reciprocal tariffs plan announced today are not going into effect immediately but could begin to be imposed within weeks as Mr Trump’s trade and economic team study bilateral tariff and trade relationships, a White House official told reporters.
Howard Lutnick, Mr Trump’s pick for Commerce secretary, said the administration would address each affected country one by one. He said the administration’s studies on the issue would be completed by April 1.
The White House officia; said the administration would examine what it called the most “egregious” issues first, including countries with the biggest trade surpluses and highest tariff rates.
07:26 PM GMT
Trump poised to target UK’s tax on US tech giants
Britain’s £700m tax on American tech giants is set to come under fire from the White House as Donald Trump escalates a global trade war.
On Thursday night, the White House said that countries’ digital services taxes could be hit with new reciprocal tariffs.
The UK’s digital services tax was introduced in April 2020 and currently charges companies a 2pc tax on their UK turnover, last year raising around £678m.
Mr Trump has long rallied against the digital services tax, even attempting during his first presidential term to sanction countries that introduced the levy.
The White House said: “Though America has no such thing, and only America should be allowed to tax American firms, trading partners hand American companies a bill for something called a digital services tax.”
It singled out Canada and France as countries that collect “over $500mn per year from American companies”.
07:18 PM GMT
Cabinet minister says retaliation would be ‘premature’
Pat McFadden, the Chancellor of the Duchy of Lancaster, has told Sky News that it is important the the UK Government “don’t overreact to every announcement”.
He said Britain’s position was that it was an “open trading economy” and said that he thought retaliation against Mr Trump’s plans would be “premature”.
He added that the Government wanted to improve its trading relationship with Europe, without reopening the Brexit debate.
The UK popularised free trade in the 19th century when it pursued a policy of unilaterally removing trade barriers, most famously on corn.
07:10 PM GMT
Trump says allies often ‘worse than our enemies’ on trade
Donald Trump told reporters tonight that US allies were often “worse than our enemies” on trade issues.
The White House revealed that levies will be tailored to each US trading partner and consider non-tariff factors including value-added tax (VAT).
“Major exporting nations of the world attack our markets with punishing tariffs and even more punishing non-tariff barriers,” Trump trade advisor Peter Navarro told reporters, taking aim at the Europe in particular over VAT.
Washington will start by examining economies with which the United States has its biggest deficits or “most egregious issues”, said a White House official.
“This should be a matter of weeks, in a few months, but not much longer than that.”
07:08 PM GMT
Trump’s tariffs plan to hurt US growth, says bank
Analysts at US banking giant Wells Fargo said in a report today that the tariffs would likely hurt growth this year, just as tax cuts could help growth recover in 2026.
“Tariffs impart a modest stagflationary shock to an economy,” the report said.
“The US economy entered 2025 with a fair amount of momentum, but we look for real GDP growth to downshift a bit over the next few quarters as the price-boosting effects of tariffs erode growth in real income, thereby weighing on growth in real consumer spending.”
07:05 PM GMT
Subsidies, regulations and currency manipulation to be targeted with tariffs
Donald Trump rolled out his plan to increase US tariffs to match the tax rates that other countries charge on imports, possibly triggering a broader economic confrontation with allies and rivals alike as Trump hopes to eliminate any trade imbalances.
“I’ve decided for purposes of fairness that I will charge a reciprocal tariff,” Trump said in the Oval Office at the proclamation signing. “It’s fair to all. No other country can complain.”
Mr Trump’s Republican administration has insisted that its new tariffs would level the playing field between US manufacturers and foreign competitors, though these new taxes would likely be paid by American consumers and businesses either directly or in the form of higher prices.
The politics of tariffs could easily backfire on Trump if his agenda pushes up inflation and grinds down growth, making this a high stakes wager for a president eager to declare his authority over the US economy.
The tariff increases would be customised for each country with the partial goal of starting trade new negotiations. But other nations might also feel the need to respond with their own tariff increases on American goods. As a result, Trump may need to find ways of assuring consumers and businesses that growth to counteract any uncertainty from the possible fallouts from his tariffs.
Trump’s proclamation identifies value added taxes (VAT) as a trade barrier to be included in any reciprocal tariff calculations.
Other nation’s tariff rates, subsidies to industries, regulations and possible undervaluing of currencies will be among the factors the Trump administration would use to assess tariffs.
A White House official said that the expected tariff revenues would help to balance the expected $1.9 trillion budget deficit. They also said the reviews needed for the tariffs could be completed within a matter of weeks or a few months.
07:00 PM GMT
UK exports could face extra charges of 21pc under Trump plans
Donald Trump’s plans for VAT to be counted as a tariff could hit the UK especially hard.
The UK Government will no doubt seek to negotiate to avoid tariffs, which could lead to a 21pc levy on goods exports to the US if the President targeted Britain’s VAT charges.
George Saravelos, the global head of FX Research at Deutsche Bank, said that if the US imposed duties based on tariff policy and VAT combined, UK exporters to the US would face extra charges of 21pc, Mr Saravelos said.
The classification of VAT as a tariff makes Donald Trump’s policy “much more damaging” for countries like the UK.
Tariffs of this scale would knock 0.4 percentage points off UK GDP growth for the next two years, according to Ahmet Kaya, of the National Institute of Economic and Social Research (Niesr), accounting for $30bn (£24bn).
06:54 PM GMT
New tariffs ‘will bring fairness back’, Trump claims
Donald Trump’s reciprocal tariffs “will bring fairness back”, the US president has claimed.
Jamieson Greer, Mr Trump’s pick as trade ambassador, said: “We’re going to look at everything, including ‘fake anti-trust’ regimes”.
06:46 PM GMT
Donald Trump says VAT is a tariff
Donald Trump views VAT - as imposed by the UK - as a tariff, he has said. “We’re going to call it a tariff,” he told reporters.
Mr Trump said that he wanted a level playing field for US companies and that his tariff plan will count tariffs, VAT and others of being worthy of reciprocation.
“Whatever they charge us we will charge them,” he said.
06:41 PM GMT
Trump will make Europe ‘a great investment opportunity’, claims stock market boss
Donald Trump’s presidency could help Europe’s stock markets as the continent is “now perceived as a great investment opportunity,” the head of Euronext has said.
Stephane Boujnah, chief executive of Euronext, which runs major stock exchanges in seven countries, said: “The first weeks in office of Donald Trump show that we have entered a time of unilateral, disinhibited decisions.
“These decisions will affect global economies, but mainly the US one. There are more and more discussions among investors since the start of the year on European companies, whose valuations are significantly below US valuations.”
06:18 PM GMT
Trump to hit Brazilian ethanol with tariffs
Donald Trump is planning to take action against Brazilian ethanol imports, Fox News has reported.
The US and Brazil are both major producers of the fuel.
Fox has learned that Mr Trump intends to impose “reciprocal” tariffs on Brazilian production.
06:06 PM GMT
Indian premier meets Musk
Indian prime Minister is in Washington DC to have discussions on trade later today with Donald Trump, after an expected US announcement on reciprocal tariffs. He has already had a “very good meeting” with Elon Musk.
“We discussed various issues, including those he is passionate about such as space, mobility, technology and innovation,” he said.
05:51 PM GMT
Trump’s trade policy poses ‘significant problem’ for UK, says ex-Blair adviser
Donald Trump’s plans for tariffs could impose a “significant problem” for the British Government, a former special adviser to Tony Blair and Gordon Brown has said.
Theo Bertram, director of the Social Market Foundation, said that Mr Trump’s “broad interpretation of what constitutes a reciprocal tariff” could hit Britain hard.
Mr Bertram said: “He has previously made clear that tariffs could be used in response to unwanted regulatory pressure on US companies, with vice-president JD Vance pointing to regulations on big US tech companies as an example of actions that the US considers unfair.
“That could pose a significant problem for the UK Government in areas like the Online Safety Act, which imposes significant burdens on US tech companies in order to protect British users, especially children.
“The Government is unlikely to give up on those protections but Trump could retaliate with higher tariffs on completely unrelated UK goods and services, testing the Government’s resolve, and indeed the UK’s ability to make its own laws.”
He added: “In the best case scenario, the Labour Government will hope that UK economy is relatively less harmed than other countries by President Trump’s tariffs.
“Even if UK firms find themselves priced out of US markets, there is some solace in the fact that we have secured more than 70 trade agreements, enabling small businesses, who are likely to struggle the most with higher tariffs, to find new customers in different markets.
“The bulk of the world’s growth is going to come from Asia in the next two decades and the platform created by the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will help enterprising small-to-medium-sized enterprises to more easily access Asia-Pacific economies, especially as the agreement’s membership expands and it offers a stepping stone to entering high-demand markets adjacent to the CPTPP.”
05:38 PM GMT
Trump’s reciprocal tariffs ‘an act of economic self-harm’
Donald Trump’s plans for reciprocal tariffs will hurt his own nation, an economist has said.
Kristian Niemietz, editorial director of the Institute of Economic Affairs, said: “Trump’s so-called reciprocal tariffs would be less bad than some of the ideas he previously floated, such as across-the-board blanket tariffs.
“This is because America’s average tariff rate would almost certainly be lower under the former proposal than under the latter. But regardless of how exactly the tariff rates are set, any increase would be worse than the status quo (which is itself far from ideal). The optimal tariff rate is 0pc.
“Reciprocal sounds nice, but it is really a misleading term in this context (as is retaliation).
“Tariffs are an act of economic self-harm: a government which raises tariffs hurts, first and foremost, its own domestic consumers. Responding to an act of self-harm with an act of self-harm is, in a sense, reciprocal, but not in the way most people would understand that term.”
05:21 PM GMT
Brooke Rollins confirmed as Trump’s agriculture secretary as tariff fights loom
Conservative lawyer Brooke Rollins was confirmed this afternoon as US secretary of agriculture. This places a close ally of Donald Trump into a position when mass deportation plans could lead to farm labour shortages and a tariff war could hit farm exports.
The Department of Agriculture was at the centre of Mr Trump’s trade war in his last administration. It increased subsidies to farmers growing the nation’s two biggest crops, maize and soybeans, after retaliatory tariffs were levied by China on the grains and international markets were disrupted. The United States is the world’s largest food exporter.
In her Senate confirmation hearing, Ms Rollins acknowledged that Mr Trump’s plans for the mass deportation of people in the country illegally could led to farm labour shortages. Growers of some vegetables and crops such as apples as well as dairy operations are especially dependent on migrant labour.
But Ms Rollins said Americans support Trump’s plans and she would work to help the president while also trying to protect farmers.
04:59 PM GMT
Trump wants new trade deal with India
Indian prime minister Narendra Modi will come bearing gifts when he meets Donald Trump later today. He is understood to be offering concessions on tariffs, fresh business deals and the prospect of cooperation on China.
Mr Trump has wielded the threat of tariffs against friend and foe alike to try to extract new trade deals, investment or law enforcement help.
India may not be an exception. Although Mr Trump had a warm relationship with Mr Modi in his first term, he has called India a “very big abuser” on trade and his levies on steel and aluminium will hit India particularly hard.
Ahead of his White House meeting on Thursday, Mr Modi has readied promises including increased liquefied natural gas, combat vehicle and jet engine purchases, according to Indian government officials. Indian officials are also looking at possible deals on US agriculture exports to India and investment in nuclear energy, along with tariff cuts in at least a dozen sectors, including electronics, medical and surgical equipment, and chemicals.
Those are areas Mr Trump’s team believes India needs to make improvements, according to a Reuters source.
It’s a “gift” for Trump, said one of the sources.
US and Indian officials were also moving forward with talks on a bilateral trade deal, with a Trump administration official saying they hoped to have a deal in place this year.
04:52 PM GMT
Wall Street rises despite looming hit to US growth
Wall Street is up this afternoon ahead of the Donald Trump’s announcement on tariffs.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Financial markets have been pretty sanguine in the face of chaotic policymaking from the White House, with the S&P 500 gaining ground ahead of the announcements.
“Although Trump’s way of doing business is to sow seeds of chaos and unpredictability to gain the appearance of domestic political wins, the prospect of tax cuts ahead is mitigating some concerns. There is also expectation that fresh rounds of tariff announcements will be quickly followed by hasty phone calls and fast rounds of negotiation.
“Nevertheless, the risk remains that inflation will be reignited if he does follow through with specific threats.
“Tariffs on steel and aluminium already look set to push up prices across a range of American goods – from canned goods and cars to household appliances and building materials. While some costs could be absorbed by importers and retailers, the burden would inevitably fall on customers in the form of higher prices. Higher-for-longer interest rates in the US risk weighing on consumer sentiment and their purchasing power, which would ultimately affect economic growth.”
The S&P 500 is up 0.6pc, the Nasdaq up by 0.9pc and the Dow Jones up by 0.3pc.
04:32 PM GMT
Reciprocal tariffs ‘unworkable and misguided’, says think tank
Donald Trump’s plans to impose reciprocal tariffs are “unworkable and misguided”, a trade policy analyst has said.
Scott Lincicome, of the Herbert A. Stiefel Center for Trade Policy Studies in Washington DC, said that the idea made “little sense in practice”.
He said that while Brazil imposes tariffs at 9pc on imports of unroasted coffee beans from the US, America currently imposes no tariffs on imports from Brazil.
However, Brazil is a major coffee producer, and America is not. The ideal conditions for coffee growing include cool to warm tropical climates. So hiking US tariffs to match Brazilian ones would simply raise prices for Americans, without turning the US into a major producer.
04:04 PM GMT
The impact of Trump’s tariffs on the UK and the world
Donald Trump has announced tariffs on some of the US’s closest allies , sparking fears of a global trade war.
The US president has threatened levies on Mexican and Canadian goods, an imposed an additional tariff on goods imported from China.
Earlier this week, Donald Trump also unveiled higher tariffs on steel and aluminium imports in a measure that UK producers say will prove a “devastating blow”.
Further action is expected against the European Union, while it remains unclear whether Britain will be targeted.
But what are tariffs and what impact will they have?
Read the full story...
03:35 PM GMT
Trump still to decide timeline for reciprocal tariffs, says reporter
The fresh tariffs that Donald Trump is planning to announce this evening will not take effect immediately, a CNBC reporter has said.
Eamon Javers, senior Washington correspondent of the US broadcaster, said: “I’m told the new tariffs President Trump announces today will NOT go into effect today. There will be a time delay of some months, possibly an April 1 start date.”
He added that the timeline is still to be decided and that Mr Trump’s trade ambassador will be developing the next steps.
03:27 PM GMT
Reciprocal tariffs to place ‘huge administrative burden’ on US
Imposing reciprocal tariffs will impose a “huge administrative burden” on the US government, according to economists.
Capital Economics said it would be more arduous to levy tariffs on individual goods according to the tariff regime in the exporting country.
It would also likely lead to higher US inflation and interest rates, the consultancy added.
India, Brazil, Turkey and Argentina would be the worst impacted as they have the biggest gap in bilateral tariffs against the US.
Economist Shilan Shah said: “The indirect impact would potentially prove bigger.
“After all, a universal tariff would essentially keep the playing field unchanged for all producers outside the US.”
He said a reciprocal tariff “would potentially undermine the case for friend-shoring in those emerging markets that have high tariff barriers”.
Instead there would be other economies which companies might choose to locate to in order to avoid tariffs, “notably Vietnam and other parts of South East Asia as well as developed markets”.
As we move towards tonight’s announcement, I will hand you over to my colleague Alex Singleton .
03:01 PM GMT
Britain to demand exemptions from Trump’s steel tariffs
Britain will seek exemptions on Donald Trump’s sweeping steel tariffs, the Business Secretary has indicated, saying the UK is in a strong position to secure leniency from the US.
Jonathan Reynolds said that he would raise the tariffs issue as soon as the US Senate confirms the appointment of Howard Lutnick, Mr Trump’s pick for commerce secretary.
Mr Reynolds added that while there was “significant overcapacity” around the world in steel, the UK was not the cause of it, and that the US defence industry relied heavily on British imports.
“I think there’s a basis for a discussion,” he said.
02:35 PM GMT
US stocks rise at the opening bell
Wall Street’s main indexes opened higher after the latest wholesale inflation figures and as Donald Trump talked about fresh tariffs and the prospect of Russia-Ukraine peace talks.
The Dow Jones Industrial Average rose 57.4 points, or 0.1pc, at the open to 44,425.94.
The S&P 500 rose 8.6 points, or 0.1pc, to 6060.59, while the Nasdaq Composite rose 47 points, or 0.2pc, to 19,696.92.
02:32 PM GMT
Trump’s tariff plans to deliver ‘modest’ hit to US economy
Car makers face a “potentially large” blow from Donald Trump’s tariff plans, according to credit ratings agency S&P Global, which said the levies would deliver only a “modest” blow to the American economy.
Analysts acknowledged the “indirect effect on downstream sectors” from metal tariffs.
The US president unveiled plans for 25pc tariffs on all US imports of steel and aluminium, which accounted for an estimated $61bn 9£48.9bn), or 1.8pc, of total goods imported to the America last year.
While it did not include the metal tariffs in its estimates, S&P Global said the impact of levies would lower GDP by less than a tenth of a percentage point.
Chief US and Canada economist Satyam Panday said: “If the announced tariffs escalate into a broader trade war, economic conditions could suffer, and we could revise down our macroeconomic forecasts as a result.
“While the tariffs should be positive for domestic steel and aluminium industries, they risk larger knock-on negative effects on downstream users of these metals, such as automakers, can manufacturers, packaging, and construction projects.”
02:11 PM GMT
US stocks on track to rise ahead of Trump tariffs
Wall Street indexes are on course to move higher at the opening bell after Donald Trump said he will announce reciprocal tariffs later.
Investors shrugged off data showing stronger than expected US wholesale inflation and falling unemployment benefit claims, which have helped cement bets that the Federal Reserve will not cut interest rates any time soon.
The Dow Jones Industrial Average was up by 0.2pc in premarket trading as the US president said he would announce reciprocal tariffs on imports to America at 6pm UK time.
The S&P 500 was up 0.2pc and the tech-heavy Nasdaq 100 gained 0.3pc before the opening bell.
02:00 PM GMT
Trump to announce tariffs at 6pm UK time
Donald Trump has said he will make an announcement at 1pm from the Oval Office on reciprocal tariffs, which will be 6pm UK time:
01:58 PM GMT
Fewer Americans claim jobless benefits
US unemployment benefits claims fell last week in another sign that the Federal Reserve is unlikely to give Donald Trump his wish to lower interest rates.
The number of Americans filing for jobless benefits fell by 7,000 to 213,000 for the week ending February 8, the Labor Department said. Analysts projected that 215,000 new applications would be filed.
Weekly applications for jobless benefits are considered representative of job losses.
The four-week average, which smooths out some of the week-to-week volatility, inched down by 1,000 to 216,000.
Despite showing some signs of weakening during the past year, the jobs market remains healthy with plentiful jobs and relatively few lay-offs.
Last week, the Labor Department reported that US employers added 143,000 jobs in January, significantly fewer than December’s 256,000 job gains.
However, the unemployment rate ticked down to an even 4pc, signaling a still very healthy labour market.
Late in January, the Federal Reserve left its benchmark lending rate alone after issuing three cuts late in 2024.
01:46 PM GMT
US wholesale inflation gathers pace
US wholesale prices rose at a faster than expected pace last month, official figures show, in a further sign that the US Federal Reserve is unlikely to cut interest rates anytime soon.
The producer prices index (PPI) rose to 3.5pc in January, following an upwardly revised 3.5pc increase in December, according to the Labor Department.
It comes a day after US consumer prices inflation rose by more than expected to 3pc last month, pushing back money market expectations for the next interest rate cut by the Federal Reserve to as late as December.
Donald Trump called for lower interest rates , which he said would complement his tariff plans.
01:39 PM GMT
‘An eye for an eye, a tariff for a tariff’, says Trump
During election campaigning, Donald Trump promised: “An eye for an eye, a tariff for a tariff, same exact amount.”
Under plans for “reciprocal” tariffs, if a country imposes a 25pc tariff on US cars, Washington will have a 25pc tariff as well on imports of cars from that country.
Indian Prime Minister Narendra Modi will hold talks with Mr Trump at the White House today, amid fears his country would be heavily hit by tariffs.
New Delhi offered some quick tariff concessions ahead of his visit, including on high-end motorcycles.
“Trump’s objective of implementing reciprocal tariffs is to ensure fair treatment for US exports, which could indirectly also address US trade imbalances with partner countries,” analysts at Nomura said.
01:26 PM GMT
The world is underestimating the risk of a US recession
From this side of the Atlantic, the US economic situation looks enviable , writes Kallum Pickering .
Stock markets are defying gravity, confidence is riding high, and real GDP – after a 2.8pc gain in 2024 – is some 12pc above its pre-pandemic level.
Over the same five-year period, economic activity in the UK has grown by a paltry 3pc. With only a 4pc increase in France, momentum is scarcely better than in the UK. But both are in less bad shape than Germany. Hampered by a massive wave of de-industrialisation, Europe’s biggest economy has not managed any overall growth since late 2019.
Over the past three years, the US has defied worries that a slump may be imminent – most notably during 2022 and 2023 as the US Federal Reserve aggressively tightened the monetary screws to curb surging inflation.
After consistently surprising to the upside, the risk of a US recession is low on financial markets’ list of concerns.
Read why now is the time to be worried .
01:10 PM GMT
EU could cut taxes on US cars to avoid Trump tariffs
The European Union was last week scrambling to cut taxes on American cars in a bid to avert a trade war with Donald Trump.
Brussels was preparing to lower tariffs of 10pc on US cars shipped into the bloc in an effort to appease the President, a senior EU lawmaker said on Friday.
Bernd Lange, who sits on the European Parliament’s trade committee, said officials were considering bringing tariffs closer to the 2.5pc levied on European cars imported into the US.
Mr Lange told the Financial Times: “We can try to have a deal before escalating costs and tariffs. We have bound tariffs for cars at the WTO [World Trade Organisation] at 10 per cent, but let’s say, to show the world we have fair relations, it might be possible to reduce them.”
12:55 PM GMT
Trump to announce reciprocal tariffs
President Donald Trump said that the United States would announce reciprocal tariffs on other countries later today.
In said a post on his Truth Social platform, he said: