What are tariffs and how do they work?

US President Donald Trump on Wednesday announced a universal “baseline” 10 per cent tariff on imports into the US, on what he has dubbed “Liberation Day”. He pinned the tax hikes as a blow against unfair trade practices, painting a portrait of the US as a country exploited by even its closest allies, according to Al Jazeera. Describing April 2, 2025 as “our declaration of America’s economic independence”, he said “reciprocal tariffs” would start at that baseline, although 60 countries would be hit with far higher rates of up to 50pc, BBC reported. “Tariff”, Trump has been quoted saying many times, “is the most beautiful word in the dictionary.” What exactly is a tariff? Tariffs are typically charged as a percentage of the price a buyer pays a foreign seller. In the United States, tariffs are collected by Customs and Border Protection agents at 328 ports of entry across the country, the Associated Press’s Paul Wiseman writes. According to BBC’s Adam Fleming, “Normally tariffs are used as a tool to manage trade, if you have got a home grown industry and you are worried that it is facing competition from cheap exports from abroad then you can put a tariff on to level the prices of products.