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Twenty-four hours later, we're in a rather different place with the tariffs - or taxes - against America's closest neighbours and trading partners on hold for 30 days. But the 10% tariffs on all goods imports from China have gone ahead, and Beijing has responded in kind. So what are the potential economic consequences of these opening salvos and could this turn into a broader trade war? [Trump's 10% tariff on China begins as Beijing plans retaliation on US energy and some cars](https://www.bbc.co.uk/news/live/c8d90v1m6qvt) [Trump's trade war with neighbours is delayed - what did they all get out of it?](https://www.bbc.co.uk/news/articles/c805jjk2klko) [How could Trump's tariffs affect the UK?](https://www.bbc.co.uk/news/articles/ckgy1lerlpko) China is subject to significant US tariffs already and has been since Trump's first term. But the blanket nature of today's new levies from the White House on every single goods import from China - from toys, to mobile phones, to clothes - is new and significant. [Beijing's promised tariff retaliation](https://www.bbc.co.uk/news/live/c8d90v1m6qvt?post=asset%3A3d27bac7-36e6-4475-9137-081140083eda#post) - including new levies on imports from the US of oil, agricultural machinery and some cars - is far less sweeping. Yet the retaliation moves us into the arena of tit-for-tat action, where the country experiencing the tariffs feels it has no choice but to hit back to show its own citizens it can't be pushed around by a foreign power. This is the [dictionary definition of a trade war](https://dictionary.cambridge.org/dictionary/english/trade-war) - and economic historians warn they tend to generate their own momentum and can rapidly spiral out of control. [Trump has used just about every justification](https://www.bbc.co.uk/news/articles/c20myx1erl6o) under the sun for tariffs, from raising more tax revenue to boosting American manufacturing and rebalancing trade. But one thing recent days confirm is the new president regards them as a powerful way to compel other nations to do what he wants. He threatened massive and punitive tariffs on Colombia when it initially refused to accept US flights of its deported nationals, but he lifted the threat when Bogota acquiesced. The White House might also point to the response of Mexico and Canada yesterday as evidence tariff threats yield results. He had threatened to ride roughshod over [his own North American free trade deal](https://www.bbc.co.uk/news/world-us-canada-45674261) unless those nations tightened up on border control. Although how much extra those two countries actually promised yesterday on border security relative to what they were already doing is open to question. Yet the problem with the White House using tariff threats in this way is that if other countries don't back down - or agreements are not reached - Trump might well feel he has no choice but to follow through or risk losing all credibility. And the targeted country might feel it has to respond with its prepared countermeasures, even if they would prefer not to. That high-risk dynamic - where things could slip out of control in an atmosphere of distrust and political pressure - is why many analysts and economists are far from comforted by how things have played out with Mexico and Canada this week. The other reason many economists fear Trump's intimidatory tariff diplomacy is its potentially chilling impact on business investment and confidence. US car firms have a [deeply integrated industrial base](https://www.cato.org/blog/seven-charts-show-how-us-tariffs-would-harm-american-auto-industry) across America, Mexico and Canada. Automotive parts cross those borders multiple times in the vehicle assembly process. The levying of 25% tariffs on each of those movements would be disastrous for these businesses. Those North American tariffs have been paused for now, but it's very hard to see US or Canadian automotive executives committing to further investment in those cross-border supply chains any time soon - and perhaps for many years to come. That will have negative implications for their productivity - and also for the wages of their employees in all three countries. The view of many economists is having cross-border supply chains makes these firms more productive than they would otherwise be and this raises US workers' wages relative to where they would be if they only manufactured in America. These same effects apply on a global scale. In light of Trump's tariff threats against the European Union, how many US firms are likely to be going ahead with planned investments in Europe - and vice versa? Countries such as Vietnam and Malaysia benefitted indirectly from the US tariffs imposed on China in Donald Trump's first presidential term, as multinationals shifted manufacturing out of China and into their territories to avoid the taxes and to continue exporting to America. But what if Trump now threatens tariffs against them too? The huge uncertainty Trump's tariff threats have injected into the global economy - even if they don't always translate into actual new taxes - will likely already be doing damage.  [What do you want BBC Verify to investigate?](https://www.bbc.co.uk/news/articles/czd9yz5n354o) [US economy](https://www.bbc.com/news/topics/c1038wnxypvt) [Trump tariffs](https://www.bbc.com/news/topics/c9vwxgl4p0dt) [Trade war](https://www.bbc.com/news/topics/ce25yderw6pt) [Donald Trump](https://www.bbc.com/news/topics/cp7r8vgl2lgt) [China economy](https://www.bbc.com/news/topics/cywd23g0qnmt) [Trade](https://www.bbc.com/news/topics/czed6gv89wrt) *** Related ['Gruesome' war bets fuel calls for crackdown on prediction markets](https://www.bbc.com/news/articles/cjwz8051y0lo) [A small US grocer is calling out the lower prices at big chains](https://www.bbc.com/news/articles/cr57g1ddqmdo) [US inflation stable ahead of Iran shock](https://www.bbc.com/news/articles/cde4w32573xo) *** More from the BBC [50 mins ago  India hopeful Iran talks will ease Hormuz route for its ships Foreign Minister S Jaishankar told FT there was no "blanket arrangement" for Indian ships to pass through the strait. 50 mins ago](https://www.bbc.com/news/articles/ckg2m8zp2n3o) [17 hrs ago  FCC chair threatens to revoke broadcasters' licences over Iran coverage After Trump criticised media coverage of the Iran war, Carr says he can remove licences if they do not serve the public interest. 17 hrs ago](https://www.bbc.com/news/articles/c626ye5gq16o) [1 day ago  Why did US and Israel attack Iran and how long could the war last? Conflict has spread across the Middle East since the US and Israel launched wide-ranging strikes on Iran on 28 February. 1 day ago](https://www.bbc.com/news/articles/cx2dyz6p3weo) [1 day ago  Will Trump help or hinder Zimbabwe's white farmers in their compensation battle? They have engaged a lobbying firm with close ties to the US president to argue their case. 1 day ago](https://www.bbc.com/news/articles/c8jxd91y2ylo) [2 days ago  Trump urges UK and other nations to send warships to Strait of Hormuz The US president says he hopes China, France, Japan and South Korea will also send ships to defend the key oil shipping route. 2 days ago](https://www.bbc.com/news/articles/cd039n9vj3vo) *** - [Home](https://www.bbc.com/) - [News](https://www.bbc.com/news) - [Sport](https://www.bbc.com/sport) - [Business](https://www.bbc.com/business) - [Technology](https://www.bbc.com/technology) - [Health](https://www.bbc.com/health) - [Culture](https://www.bbc.com/culture) - [Arts](https://www.bbc.com/arts) - [Travel](https://www.bbc.com/travel) - [Earth](https://www.bbc.com/future-planet) - [Audio](https://www.bbc.com/audio) - [Video](https://www.bbc.com/video) - [Live](https://www.bbc.com/live) - [Weather](https://www.bbc.com/weather) - [BBC Shop](https://shop.bbc.com/) - [BritBox](https://www.britbox.com/?utm_source=bbc.com&utm_medium=referral&utm_campaign=footer) BBC in other languages ### The BBC is in multiple languages #### Read the BBC In your own language [Oduu Afaan Oromootiin](https://www.bbc.com/afaanoromoo) [Amharic ዜና በአማርኛ](https://www.bbc.com/amharic) [Arabic عربي](https://www.bbc.com/arabic) [Azeri AZƏRBAYCAN](https://www.bbc.com/azeri) [Bangla বাংলা](https://www.bbc.com/bengali) [Burmese မြန်မာ](https://www.bbc.com/burmese) [Chinese 中文网](https://www.bbc.com/zhongwen/simp) [Dari دری](https://www.bbc.com/dari) [French AFRIQUE](https://www.bbc.com/afrique) [Hausa HAUSA](https://www.bbc.com/hausa) [Hindi हिन्दी](https://www.bbc.com/hindi) [Gaelic NAIDHEACHDAN](https://www.bbc.com/naidheachdan) [Gujarati ગુજરાતીમાં સમાચાર](https://www.bbc.com/gujarati) [Igbo AKỤKỌ N’IGBO](https://www.bbc.com/igbo) [Indonesian INDONESIA](https://www.bbc.com/indonesia) [Japanese 日本語](https://www.bbc.com/japanese) [Kinyarwanda GAHUZA](https://www.bbc.com/gahuza) [Kirundi KIRUNDI](https://www.bbc.com/gahuza) [Korean 한국어](https://www.bbc.com/korean) [Kyrgyz Кыргыз](https://www.bbc.com/kyrgyz) [Marathi मराठी](https://www.bbc.com/marathi) [Nepali नेपाली](https://www.bbc.com/nepali) [Noticias para hispanoparlantes](https://www.bbc.com/mundo) [Pashto پښتو](https://www.bbc.com/pashto) [Persian فارسی](https://www.bbc.com/persian) [Pidgin](https://www.bbc.com/pidgin) [Polish PO POLSKU](https://www.bbc.com/polska) [Portuguese BRASIL](https://www.bbc.com/portuguese) [Punjabi ਪੰਜਾਬੀ ਖ਼ਬਰਾਂ](https://www.bbc.com/punjabi) [Russian НА РУССКОМ](https://www.bbc.com/russian) [Serbian NA SRPSKOM](https://www.bbc.com/serbian/lat) [Sinhala සිංහල](https://www.bbc.com/sinhala) [Somali SOMALI](https://www.bbc.com/somali) [Swahili HABARI KWA KISWAHILI](https://www.bbc.com/swahili) [Tamil தமிழில் செய்திகள்](https://www.bbc.com/tamil) [Telugu తెలుగు వార్తలు](https://www.bbc.com/telugu) [Thai ข่าวภาษาไทย](https://www.bbc.com/thai) [Tigrinya ዜና ብትግርኛ](https://www.bbc.com/tigrinya) [Turkish TÜRKÇE](https://www.bbc.com/turkce) [Ukrainian УКРАЇНСЬКA](https://www.bbc.com/ukrainian) [Urdu اردو](https://www.bbc.com/urdu) [Uzbek O'ZBEK](https://www.bbc.com/uzbek) [Vietnamese TIẾNG VIỆT](https://www.bbc.com/vietnamese) [Welsh NEWYDDION](https://www.bbc.com/cymrufyw) [Yoruba ÌRÒYÌN NÍ YORÙBÁ](https://www.bbc.com/yoruba) Follow BBC on: - [Terms of Use](https://www.bbc.com/pages/terms-of-use) - [Subscription Terms](https://www.bbc.com/pages/subscription-terms) - [About the BBC](https://www.bbc.co.uk/aboutthebbc) - [Privacy Policy](https://www.bbc.com/pages/privacy-policy) - [Cookies](https://www.bbc.com/usingthebbc/cookies/) - [Accessibility Help](https://www.bbc.co.uk/accessibility/) - [Contact the BBC](https://www.bbc.co.uk/contact) - [Advertise with us](https://advertising.bbcstudios.com/) - [Do not share or sell my info](https://www.bbc.com/usingthebbc/cookies/how-can-i-change-my-bbc-cookie-settings/) - [BBC.com Help & FAQs](https://help.bbc.com/hc/) - [Content Index](https://www.bbc.com/pages/content-index) - [Set Preferred Source](https://www.bbc.com/future/article/20260128-how-to-make-google-put-trusted-sources-up-top-when-you-search) Copyright 2026 BBC. 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4 February 2025 Ben ChuBBC Verify EPA-EFE/REX/Shutterstock Just a day ago, Donald Trump was threatening a multi-front trade war with Canada, Mexico and China that would take the global economy into uncharted territory. Twenty-four hours later, we're in a rather different place with the tariffs - or taxes - against America's closest neighbours and trading partners on hold for 30 days. But the 10% tariffs on all goods imports from China have gone ahead, and Beijing has responded in kind. So what are the potential economic consequences of these opening salvos and could this turn into a broader trade war? China is subject to significant US tariffs already and has been since Trump's first term. But the blanket nature of today's new levies from the White House on every single goods import from China - from toys, to mobile phones, to clothes - is new and significant. [Beijing's promised tariff retaliation](https://www.bbc.co.uk/news/live/c8d90v1m6qvt?post=asset%3A3d27bac7-36e6-4475-9137-081140083eda#post) - including new levies on imports from the US of oil, agricultural machinery and some cars - is far less sweeping. Yet the retaliation moves us into the arena of tit-for-tat action, where the country experiencing the tariffs feels it has no choice but to hit back to show its own citizens it can't be pushed around by a foreign power. [Trump has used just about every justification](https://www.bbc.co.uk/news/articles/c20myx1erl6o) under the sun for tariffs, from raising more tax revenue to boosting American manufacturing and rebalancing trade. But one thing recent days confirm is the new president regards them as a powerful way to compel other nations to do what he wants. He threatened massive and punitive tariffs on Colombia when it initially refused to accept US flights of its deported nationals, but he lifted the threat when Bogota acquiesced. The White House might also point to the response of Mexico and Canada yesterday as evidence tariff threats yield results. He had threatened to ride roughshod over [his own North American free trade deal](https://www.bbc.co.uk/news/world-us-canada-45674261) unless those nations tightened up on border control. Although how much extra those two countries actually promised yesterday on border security relative to what they were already doing is open to question. Yet the problem with the White House using tariff threats in this way is that if other countries don't back down - or agreements are not reached - Trump might well feel he has no choice but to follow through or risk losing all credibility. And the targeted country might feel it has to respond with its prepared countermeasures, even if they would prefer not to. That high-risk dynamic - where things could slip out of control in an atmosphere of distrust and political pressure - is why many analysts and economists are far from comforted by how things have played out with Mexico and Canada this week. The other reason many economists fear Trump's intimidatory tariff diplomacy is its potentially chilling impact on business investment and confidence. US car firms have a [deeply integrated industrial base](https://www.cato.org/blog/seven-charts-show-how-us-tariffs-would-harm-american-auto-industry) across America, Mexico and Canada. Automotive parts cross those borders multiple times in the vehicle assembly process. The levying of 25% tariffs on each of those movements would be disastrous for these businesses. Those North American tariffs have been paused for now, but it's very hard to see US or Canadian automotive executives committing to further investment in those cross-border supply chains any time soon - and perhaps for many years to come. That will have negative implications for their productivity - and also for the wages of their employees in all three countries. The view of many economists is having cross-border supply chains makes these firms more productive than they would otherwise be and this raises US workers' wages relative to where they would be if they only manufactured in America. These same effects apply on a global scale. In light of Trump's tariff threats against the European Union, how many US firms are likely to be going ahead with planned investments in Europe - and vice versa? Countries such as Vietnam and Malaysia benefitted indirectly from the US tariffs imposed on China in Donald Trump's first presidential term, as multinationals shifted manufacturing out of China and into their territories to avoid the taxes and to continue exporting to America. But what if Trump now threatens tariffs against them too? The huge uncertainty Trump's tariff threats have injected into the global economy - even if they don't always translate into actual new taxes - will likely already be doing damage.