Image source, Reuters

Most countries levy tariffs in some form. Here's a brief overview of some of the arguments in favour - we’ve done the same thing for the "against" camp and will bring you that in our next post.

Protection of a fledgling industry: Some countries have used tariffs as a way to help establish a new industry domestically, before they are competitive.

National resilience: Some products, such as food or weapons, are sometimes deemed worth retaining domestically, even if they could be produced more efficiently elsewhere. Subsidies can be used for the same effect.

Fair trade: If another country has lower standards - for example on the environment or workers’ rights - or they subsidise their industries with government cash, or have tariffs themselves, then imposing tariffs can level the playing field.

Jobs: Tariffs are a charge on entry, which can incentivise businesses to make their product in the country they want to sell in. This can boost employment.

Income: Tariffs are a tax paid to the government, and so can bolster the public finances. Donald Trump, for example, says tariffs will enable him to cut taxes for American workers.

Negotiating tactic: The threat of tariffs alone can be a way to try to win concessions from others in trade talks - or in other negotiations.

Could consumers be the wildcard in trade wars?published at 17:31 British Summer Time 2 April

17:31 BST 2 April

Faisal Islam
Economics editor

Image source, Getty Images

Tesla’s quarterly figures were a big miss.

Elon Musk’s electric vehicle company sold 40,000 fewer cars than expected by the market, and 50,000 fewer than in the same period last year. Its share price fell 6%.

While the company points to its transition to a new version of its most popular car, there have clearly been protests and boycotts around the world at Musk’s outspoken and controversial political involvement. At one point President Trump held what appeared to be a sales event at the White House.

It points to a significant and potentially underrated feature of a trade war in the social media age. Retaliation does not necessarily require a government issuing a tariff.

Consumers can enter their own pressure on other countries, that could be even more powerful than a tariff. It is clearly occurring in Canadian market for both US goods and travel. Could consumers be the wildcard in this trade battle?

Image source, EPA

Democrats have widely denounced Trump's agenda on tariffs, including House Minority Leader Hakeem Jeffries, who is speaking this morning ahead of the White House announcement.

Jeffries is criticising the Trump administration for its "poor record" on lowering the cost of living for ordinary Americans.

"America is too expensive," he tells reporters at his weekly press conference. "Costs aren't going down in America, they're going up. And the Trump tariffs are going to make things more costly."

He accuses Trump of driving the US economy towards recession. "This is not liberation day," he says. "It's recession day."

Image source, Reuters

Earlier we brought you comments from Italy's PM Giorgia Meloni, warning against a trade war. Now we're hearing similar sentiments from Germany.

The country is Europe's biggest economy and the third biggest in the world, according to World Bank data, after the US and China. Ahead of Trump's announcement on new tariffs later today, it's warning back-and-forth tariffs will be bad for everyone involved.

"The costs of a trade war do not fall on one side but can become expensive for both sides," says government spokesman Steffen Hebestreit.

He adds that Berlin is "ready and willing to negotiate at the European level with the United States" to avoid being drawn into a trade war.

Germany's economy is geared towards exports, particularly vehicles and vehicle parts. It exported roughly 3.4 million new cars last year, external, according to German government data, with about 13% of them imported by the US.

Image source, Reuters

Mexican President Claudia Sheinbaum has underlined that Mexico will not be seeking "tit-for-tat" retaliatory tariffs on the US, the Reuters news agency is reporting.

She says that a "comprehensive plan" will be announced tomorrow.

As a reminder, Mexico has already seen raised duties on certain products - with President Trump previously imposing 25% tariffs on all steel and aluminium imports as well as additional 25% tariffs on other imports from both Mexico and Canada.

The impact of tariffs on UK prices remains uncertainpublished at 16:37 British Summer Time 2 April

16:37 BST 2 April

Dharshini David
Deputy economics editor

The impact of a US tariff on all British goods is very uncertain. It depends on not just on the scale of any tariffs applied on British products, but how the government, businesses and consumers react.

As the car industry knows already, tariffs are extremely worrying for the industries affected - as an exporter you hope that either some of it can be soaked up in the supply chain or your American customers will be happy to pay higher prices - or you take a hit to your own profits by lowering prices.

Or you may lose sales. Tariffs are undeniably bad news for exporters in the firing line.

But their impact on prices in the UK is uncertain.

If the UK government retaliates with tariffs on American products, households here could face rises. But countries such as China, if disadvantaged by American tariffs, could try to send their goods here instead, pushing down prices.

Image source, Getty Images

As Trump's tariffs announcement - or "Liberation Day" as he's billing it - looms, here's what you need to know:

When: around 16:00 EST (21:00 BST)

Where: the White House Rose Garden in Washington DC

What: President Donald Trump will announce his latest tariffs in a spoken statement, at an event called "Make America Wealthy Again"

After Trump speaks, we'll have a raft of correspondents dissecting what it means for the US, the rest of the world and you as a consumer.

And if you're hungry for more basics, we've got everything you need to know here.

Davide Ghiglione
Reporting from Rome

Image source, Reuters

Italian Prime Minister Giorgia Meloni is warning that new US tariffs could have severe consequences for Italian producers and limit access to high-quality Italian goods for American consumers.

Addressing the looming trade tensions, Meloni says: “The United States is our second-largest export market, with a 17% increase in exports in 2024. The US market is crucial for us."

"It is clear that the introduction of new tariffs would have a heavy impact on Italian producers. I also believe it would be unfair to many Americans, as it would limit access to our excellent products to only those who can afford higher prices,” she adds.

Meloni also stresses the need to avoid a trade war but says they wouldn't exclude taking measures to "defend our industries if necessary".

Italian President Sergio Mattarella also called tariffs a “profound mistake” and urged Europe to respond with a “united, calm, and determined” stance.

Mitchell Labiak
Business reporter

Depending on who you ask, today’s tariffs from Trump either risks starting, or risks the continuation of, a trade war.

The idea refers to when one country retaliates to tariffs from another country by imposing their own tariffs, which are then retaliated against in turn, and so on.

The idea will be unfamiliar to those who have lived through decades of globalisation. For years, conversations around global trade have been about tearing down trade barriers, not putting them up.

Trump has changed all that.

The metaphor "trade war" works particularly well because it will likely end the same way wars do: negotiation.

Tom Espiner
Business reporter

Image source, Adam Sopher

Some businesses who export to the US are “frustrated” by the prospect of tariffs, but appreciate the UK government’s stance in keeping a cool head, says Adam Sopher, co-founder of Joe & Sephs popcorn.

The US only represents about 3% of Joe & Sephs’ sales, but it’s a growing market. He’s been building up the US side of the business for years, with encouragement from the government post-Brexit.

He says with both the US and EU now looking like tricky markets to export to, his firm will have to “pivot” more to Asia and the Middle East.

Most of his US sales come around Christmas, and orders are usually in by mid-February - but the US firms he supplies to either now don’t want the “faff” of stocking his popcorn, or are waiting for tonight’s announcement.

Trump has made dozens of interventions on tariffs in his second term, but most have been unofficial proposals and it's unclear how many the US will proceed with.

However, he has also signed several official orders.

Below illustrates the current situation: as you'll see, some tariffs apply to one country, multiple countries or the whole world.

Trading has begun after the opening bell rang out at the New York Stock Exchange in the last hour.

Today is a big day for investors as tariff uncertainty wreaks havoc on US markets. The S&P 500 and the Nasdaq Composite - two major market indices - posted their worst quarterly performance since 2022 this week.

At market open, the S&P 500 was down 1%, the Dow Jones Industrial Average was down 0.82%, and the Nasdaq Composite was down 1.38%.

Markets have since rebounded slightly but we'll keep you updated over the course of the day.

Annabelle Liang
Business reporter

Image source, Reuters

Liberation Day is celebrated by countries around the world to mark the end of foreign occupation or dictatorship.

It has the same spirit of Independence Day that Americans commemorate on 4 July, when the founding fathers declared independence from Great Britain.

Trump has said the tariffs he will announce will free the country from depending on foreign goods.

But investors are unlikely to be "liberated" from tariff uncertainties, says Vasu Menon, Managing Director for Investment Strategy at OCBC Bank.

"Given Trump’s modus operandi so far, tariff news has been coming out gradually in phases and with lots of twists and turns - we could see more of this in the coming weeks," Menon says.

"If countries retaliate, Trump could up the ante - this possibility will probably continue to keep investors nervous."

Jayne McCormack
BBC News NI political correspondent

Prime Minister Keir Starmer says the government is “looking carefully” at the prospect of any retaliatory tariffs the EU may announce in response to President Trump and how they could impact Northern Ireland.

Northern Ireland is in a unique position as, despite being in the UK, goods being imported into Northern Ireland have to meet EU rules under post-Brexit arrangements.

In that circumstance, US goods entering Northern Ireland would have to pay EU tariffs while US goods entering the rest of the UK would not.

Starmer says Number 10 will be “calm and pragmatic” and keep in mind the concerns of workers and businesses in Northern Ireland. “Northern Ireland will be at the forefront of all our decisions."

He adds that the Business Secretary Jonathan Reynolds spoke to the Northern Ireland Executive earlier today to reassure them, ahead of the expected plans by Trump.

A European Commission spokesperson says the EU will respond to new tariffs set to be announced by the US but it will happen at an "appropriate moment".

Speaking to reporters, Olof Gill says the EU is in "waiting mode" right now, but they have already conducted analysis into the possible impact tariffs will have.

They will deliver a two-step response, Gill says. The first will be on the steel and aluminium tariffs already in place, and a second which looks at everything else, he adds.

The first is currently in internal processes, and the second will be issued after today's expected announcement.

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Natalie Sherman
New York business reporter

Image source, Dave Gold

Americans are responding to the uncertainty of the economy already, which could change as the tariffs come into effect.

After his investments were hit in the recent stock market sell-off, Dave Gold drew up a budget and started slashing his spending.

He cancelled Netflix, challenged himself to avoid Amazon purchases for a month, and scaled back his travel, managing to cut his expenses in half.

"It's just really hard to plan and be confident about what next month looks like," says the 37-year-old, who lives in Wyoming and works in finance.

"I thought it was time to reel it back in and protect myself in case things do happen."

Dave is not the only American reining in their spending. Retail sales also fell in February, while firms from Walmart to Delta Air Lines have warned of slackening demand.

Meanwhile, job growth has slowed and the stock market is now trading at its lowest levels since September.

Ian Aikman
Live reporter

Image source, Reuters

It’s just past lunchtime in the UK, with several hours to go before Trump's big tariffs announcement. Here's what you need to know.

• US President Donald Trump is set to unveil sweeping new tariffs at 16:00 EST (21:00 BST) - a day he has dubbed “Liberation Day”

• World leaders are preparing to respond, with UK Prime Minister Keir Starmer promising a pragmatic approach while ruling nothing out

• The United Auto Workers union has declared tariffs on cars a victory for US autoworkers
• And Trump's trade fight is tapping into many US exporters' longstanding frustrations about foreign competition and policies they face abroad

• But one Brooklyn business owner fears Trump’s move could backfire, as he will have to pass price rises onto customers

• Some in the US fear the economic downturn tariffs could bring, with one couple pausing their plans for children

• BBC business reporter Mitchell Labiak explores how life could get more expensive for Americans
• And the BBC's Jonathan Josephs asks if tariffs will help or harm inflation

What are tariffs and how could they impact prices?published at 13:41 British Summer Time 2 April

13:41 BST 2 April

Image source, Getty Images

In practical terms, a tariff is a domestic tax levied on goods as they enter the country, proportional to the value of the import.

So a car imported to the US with a value of $50,000 (£38,000) subject to a 25% tariff, would face a $12,500 (£9,650) charge.

The charge is physically paid by the domestic company that imports the goods, not the foreign company that exports them.

So, in that sense, it is a straightforward tax paid by domestic US firms to the US government.

If the US importing firm passes on the cost of the tariff to the person buying the product in the US, the consumer sees higher retail prices.

If the US importing firm absorbs the cost of the tariff itself and doesn’t pass it on, then that firm faces lower profits.

Alternatively, it is possible that foreign exporters might have to lower their wholesale prices by the value of the tariff in order to retain their US customers.

All three scenarios are theoretically possible.

It has been a dizzying few months of Trump announcements on tariffs, paired with several rollbacks and delays. Let's take a look at what tariffs have come into effect so far:

4 February: 10% tariff on goods from China

4 March: 10% tariff on Chinese goods doubled to 20%; 25% tariff on goods from Mexico and Canada as well as 10% on Canadian energy

6 March: Tariffs on Canadian potash - used in fertiliser by US farmers - reduced from 25% to 10%

12 March: 25% tariff on global steel and aluminium imports

2 April: 25% tariff on all cars coming into the US comes into effect today