Donald Trump’s sweeping tariffs explained

All you need to know about President's move to impose higher-than-expected duties on all US trading partners

The Port of Los Angeles. The new tariffs are likely to cause a global trade war that threatens to stoke inflation and stall economic growth. EPA

US President Donald Trump announced sweeping tariffs on US partners on Wednesday, with an aim to boost domestic manufacturing and protect local industries.

The world’s largest economy will impose a minimum of 10 per cent levies on all imports. However, the tariff rates are higher for some trading partners including China, India and the EU.

The baseline 10 per cent tariff will go into effect on April 5, while the higher reciprocal rates will start on April 9.

“April 2, 2025, will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again,” Mr Trump said while announcing the new tariffs in Washington on Wednesday.

What are reciprocal tariffs and how do they work?

The US will impose the same tax on imports that other countries charge on American exports on a product-by-product basis.

For example, if a country imposes a 2 per cent tax on certain US products that are exported, the US will levy the same amount of import tax on that category. The tit-for-tat tariffs are expected to disrupt trade around the world and make goods costlier for US consumers and businesses.

Trump announces tariffs on the rest of the world

01:03

Which countries are facing higher tariffs?

Some of the biggest economies in the world are being charged higher tariffs, including 34 per cent for China, 26 per cent for India and 20 per cent for the EU. Countries including Vietnam, Pakistan, Laos, Thailand, Sri Lanka, Switzerland and South Africa are also facing higher tariffs as part of the new trade policy.

Lesotho as well as Saint Pierre Miquelon are subject to a 50 per cent tariff, the highest of the charges announced, followed by Cambodia at 49 per cent, Laos at 48 per cent, Madagascar (47 per cent), Vietnam (46 per cent), Sri Lanka and Myanmar (both 44 per cent), Syria (41 per cent), Mauritius (40 per cent) and Iraq (39 per cent).

Serbia, Botswana, Taiwan and Indonesia are also facing higher tariff charges.

China has been hit particularly hard by the new tariffs, with the total levy on imports reaching more than 50 per cent after the world’s second largest economy was slapped with 20 per cent duties earlier this year.

Meanwhile, countries in the Middle East including Saudi Arabia, the UAE, Egypt and Morocco will have a tariff rate of 10 per cent. Syria and Iraq are subject to tariffs of 41 per cent and 39 per cent, respectively.

A group of islands near Antarctica including Heard Island and McDonald Islands have also been levied with a 10 per cent tariff.

Canada and Mexico, the two largest US trading partners, already face 25 per cent tariffs on many goods and will not face additional levies from Wednesday's announcement.

Russia, North Korea, Cuba and Belarus are not included in the list as they already face extensive sanctions and trade is minimal with the US.

Explained: Impact of Trump’s tariffs on the Middle East

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How are countries responding?

China has firmly opposed the tariffs and will adopt countermeasures to safeguard its rights and interests, Xinhua news agency said, quoting a representative of the Ministry of Commerce on Thursday.

“There is no winner in a trade war, and protectionism leads nowhere,” the representative said. The approach by the US disregards the balance of interests achieved through many years of multilateral trade negotiations and ignores the fact that the US has long benefited from international trade, the representative added.

The tariffs are “a major blow to businesses and consumers worldwide. Europe is prepared to respond”, warned European Commission President Ursula von der Leyen.

“Tariffs are taxes, paid by the people. But Europe has everything to protect our people and our prosperity. We will always promote and defend our interests and values,” she said in a post on social media platform X on Thursday.

Ajay Sahai, chief executive of the Federation of Indian Export Organisations, told AFP the tariffs will “hurt demand” for its exports.

“The tariffs slapped on India are definitely both high and higher than expected,” he said.

But he said rival nations like China and Vietnam had been hit harder, which opened up space for India to gain a market share.

What comes next?

The new tariffs are likely to cause a global trade war that threatens to stoke inflation and stall economic growth. Oil and global stocks have already dropped following the announcement on concerns related to global growth.

The International Monetary Find will probably lower the economic outlook slightly in its next World Economic Outlook update in about three weeks, but “we don't see recession on the horizon”, its managing director Kristalina Georgieva told Reuters this week.

The IMF in January raised its global economic growth estimate for this year to 3.3 per cent from 3.2 per cent, with a half percentage-point upgrade to the US outlook – to 2.7 per cent – accounting for most of that increase.