World leaders are bracing for an escalation in the US trade war with Donald Trump set to unveil a swathe of tariffs on imported goods.
The US president is set to announce a string of fresh tariffs on so-called “Liberation Day” in an effort to increase homegrown production and reduce trade imbalances.
The changes are set to range from levies on countries buying Venezuelan oil to reciprocal tariffs on countries with “unfair taxes” on US goods.
But some countries will be hit harder than others, with a handful already bearing the brunt of Trump’s trade war.
What are the tariffs and who is impacted?
All countries worldwide which trade with the United States are at risk of facing tariffs on Mr Trump’s so-called “Liberation Day”.
The United States imported around $3.3 trillion in goods from abroad last year, and latest reports from the Washington Post claim the White House has drafted tariffs “of around 20 per cent on most imports to the United States”.
As it stands, existing tariffs on goods from Mexico, Canada and China, as well as on imported steel and aluminium, plus a new 25 per cent tariff on vehicles and parts., will cover at least $1.4 trillion-worth of goods, according to the Tax Foundation.
But that value of imports hit by taxes will increase with a series of reciprocal tariffs to be announced by Donald Trump in the coming hours, plus levies on Venezuelan oil importers, and possible undefined tariffs on agricultural products from overseas.
“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States,” Mr Trump announced on Truth Social in early March. “Tariffs will go on external product on April 2nd. Have fun!”
Mr Trump had warned “all countries” will be affected by the looming reciprocal tariffs – although a statement alongside his Presidential Memorandum in February suggested that countries which either have a deficit in trade with the US – meaning that they export more than they import – or place higher tariffs on US products would be targeted.
The memorandum stated that these “unfair” taxes on US goods cost American firms over $2 billion each year.
But as of Tuesday evening, it is still unclear which countries will be hit by the latest round of tariffs, and to what degree, and so economists are unable to estimate the value of trade impacted.
Instead, US treasury secretary Scott Bessent singled out a “top 15 per cent” of countries that trade heavily with the US and impose high tariffs and barriers to imports – but would not name them, or give more detail on what the percentage figure was for.
Another member of Mr Trump’s National Economic Council said that the administration was targeting countries that were in a trade deficit with the US; amounting to a total goods trade deficit of $1.2 trillion in 2024.
Countries that export more to the US than they import include China, the EU, Mexico, Vietnam, Ireland, Germany, Taiwan, South Korea, Canada, India, Thailand, Italy, Switzerland, Malaysia, Indonesia, France, Austria, and Sweden.
The most likely scenario is countries across both groups will be affected, with Trump’s memorandum directly calling out France, Brazil, Canada, India, China, and the EU as a whole.
Despite not being in a trade deficit, the UK may also be affected, with the White House including value-added tax (VAT) in its list of “unfair, discriminatory, or extraterritorial taxes imposed by our trading partners on United States businesses, workers, and consumers”.
UK efforts to negotiate a deal with the US for exemptions continued into Tuesday night.
The ‘big three’ countries set to suffer the most
Canada, Mexico and China – the only three countries so far to face targeted tariffs – stand to lose the most from Mr Trump’s trade war.
For Canada, Mr Trump has already applied a 25 per cent tariff on goods with temporary exemptions for items including textiles and apparel, with some $253 billion worth of imports impacted.
But with the temporary exemptions due to expire tomorrow, that figure is likely to rise for the country which imported around $421.2 billion in goods to the US in 2024.
For Mexico, $236 billion of the country’s $507 billion goods exported to the US – around 47 per cent – are currently under 25 per cent tariffs while exemptions are in place. Again, exemptions expire on 2 April.
For China, $430 billion of goods exported to the United States have already been hit by 20 per cent tariffs, according to the Tax Foundation.
But these figures do not include the additional tariffs on steel and aluminium, nor the 25 per cent incoming on cars and vehicle parts imported from abroad.
The various tariffs which Mr Trump is introducing have the potential to be cumulative, according to the Center for Strategic and International Studies (CSIS), which presents major concerns for the three countries in particular.
Countries could face a combination of nationwide, reciprocal, and industry-specific tariffs on the same goods, warns the CSIS.
Heavy tariffs on foreign vehicles
Mr Trump’s latest sector-specific tariff took aim at the automotive industry, with a 25 per cent tax on vehicles and car parts imported from abroad beginning on 2 April.
Automotive imports represent $458 billion in trade to the US, and have grown by nearly a quarter since Covid with around eight million cars imported in 2024.
The countries which will suffer most are once again Mexico, Canada and China; but also Japan, South Korea and Germany, according to figures from the US Bureau of Economic Analysis (USBEA).
Top brands like Jaguar Land Rover, Volvo, Volkswagen and Mercedes-Benz manufacture the majority of their US-sold cars abroad, and will likely suffer most from the tariffs.
But homegrown car brands like General Motors (GM) and Ford are also at risk, with both American staples having automotive factories in Mexico and further afield.
In addition, companies that manufacture in the US will face higher costs in supply chains, as imported vehicle parts – worth approximately $86 billion last year – will also be subject to the 25 per cent tariff.
Extra levy for Venezuelan oil buyers
What’s more, just last week Mr Trump announced that he would introduce a 25 per cent levy on any country importing oil and gas from Venezuela – and on Venezuela itself, effective from 2 April.
The 25 per cent would be on top of any other existing tariffs, according to the Tax Foundation; in the US’s attempt to “sever the financial lifelines of Nicolás Maduro’s corrupt regime”.
The US itself is one of the top importers of Venezuelan oil, behind only China. Other buyers are India, Cuba, and the EU bloc.
If Mr Trump follows through on his plans to hike an additional 25 per cent on goods from these countries, then China in particular would face substantial barriers to trade with the US.
But the greatest loser in the trade war could be everyday Americans.
The price of a new car is set to increase by around $3,000 on average according to economists, and retaliation for tariffs in the previous administration led to a $27 billion loss in agricultural exports, primarily hitting farmers.
Critics say a blanket tariff on all imported goods – at $3.3 trillion across all industries in 2024 – could come at a cost for American consumers at the cash register.
