The US has introduced a 25% tariff on all steel and aluminium imports from around the world.

In response, Canada and the EU have announced new tariffs on US goods worth billions of dollars, stoking fears of a global trade war.

President Donald Trump has threatened to impose a 200% tariff on alcohol from EU countries unless the bloc scraps its “nasty 50% tariff on whisky”.

Trump has already imposed 25% tariffs on other imports from Mexico and Canada – with some exemptions – and a 20% levy on Chinese goods.

What are tariffs and how do they work?

Tariffs are taxes charged on goods imported from other countries.

The companies that bring the foreign goods into the country pay the tax to the government.

Typically, tariffs are a percentage of a product’s value. A 20% tariff on Chinese goods means a product worth $10 (£7.76) has an additional $2 charge.

Firms may choose to pass on some or all of the cost of tariffs to customers.

The US has typically charged lower tariffs on goods than other countries.

Economists fear Trump’s new taxes – and the further tariffs on foreign imports that he has suggested may start on 2 April – could lead to a sharp increase in the prices consumers pay in the US and around the globe.

• BBC reporters answer your tariff questions

Why is Trump using tariffs?

Tariffs are a central part of Trump’s overall economic vision.

He says tariffs will boost US manufacturing and protect jobs, raising tax revenue and growing the domestic economy.

He also wants to restore America’s trade balance with its foreign partners – reducing the gap that exists between how much the US imports from and exports to individual countries.

But he has refused to rule out the prospect of a recession as a result of his trade policies, which sent US stocks sharply down in the days before the metal tariffs took effect.

US Commerce Secretary Howard Lutnick later said the tariffs were “worth it” even if they did lead to an economic downturn.

Trump’s tariffs initially targeted goods from China, Mexico and Canada.

These accounted for more than 40% of imports into the US in 2024.

But Trump has accused the three countries of not doing enough to end the flow of migrants and illegal drugs such as fentanyl into the US.

All three countries have rejected the accusations.

How do the steel and aluminum tariffs work?

The 25% tariffs on all US imports of steel and aluminum began on 12 March.

The US buys more steel than any other country – with Canada, Brazil and Mexico its top three suppliers.

Canada is also the largest supplier of aluminum to the US, providing almost 60% of the amount imported.

When Trump first announced the tariff on steel and aluminium imports, he said there would be no exceptions.

On 11 March, he threatened to double the levy for Canadian metals because of that country’s decision to charge more to electricity customers in three northern US states, in response to other US tariffs.

Trump scrapped this plan just hours before it was due to take effect, after Canada agreed to suspend the extra energy charges.

Trump previously announced tariffs of 25% on steel and 10% on aluminium in 2018, during his first term as president.

However, he later negotiated exceptions for many countries including Australia, Canada and Mexico.

Despite those previous exemptions, tariffs raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.

Three American goods that could rise in price due to metal tariffs
How have other countries reacted to the steel tariffs?
In the hours after the levy took effect, Canada and the EU both announced retaliatory tariffs.

Canada introduced a 25% tariff on an additional C$29.8bn ($20bn; £16bn) worth of US goods from 13 March.

This includes steel products worth C$12.6bn, sports equipment, computers and cast iron items.

Incoming Canadian PM Carney ready to talk trade with Trump if ‘there’s respect for sovereignty’
The EU tariffs will target US goods worth €26bn (£22bn), and will start on 1 April and be fully in place on 13 April.

They will cover items ranging “from boats to bourbon to motorbikes”, in addition to steel and aluminium goods such as pipes, window frames and tin foil.

European Commision President Ursula von der Leyen said she “deeply regrets this measure”. Tariffs are “bad for business and worse for consumers”, she added.

Writing on his social media site, Truth Social, Trump said that if the EU’s 50% tax on US whiskey was not removed “immediately”, the US would levy a 200% tariff on all wines, Champagnes and alcoholic products coming out of EU represented countries.

“This will be great for the Wine and Champagne businesses in the US,” he added.

EU braces for higher prices as US trade war ramps up
The UK exports hundreds of millions of pounds worth of steel to the US every year.

Prime Minister Sir Keir Starmer told MPs that the UK will take “pragmatic approach” to the US tariffs, but confirmed it will “keep all options on the table”.

How will the latest Trump tariffs affect the UK?
China’s foreign ministry said the country would take “all necessary measures” to safeguard its rights and interests, arguing that the tariffs breached World Trade Organization rules.

What is happening with the other tariffs against Canada and Mexico?
Trump has already introduced 25% tariffs on other goods from both US neighbours, Canada and Mexico.

These were originally due to start on 4 February but were delayed for a month to allow further negotiations. The 25% tariffs began on 4 March, with a 10% tariff on Canadian energy imports.

On 5 March, Trump announced a month-long tariff exemption for cars made in North America which comply with the continent’s existing free trade agreement, the US-Mexico-Canada agreement (USMCA).

That deal, which was negotiated by Trump during his first term in office, sets out rules for how much of a car must be made in each country to qualify for duty-free treatment.

The Canadian and Mexican tariffs had prompted fears of significant impacts on car manufacturing.

Component parts typically cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.

Graphic showing how many car industry supply chains cross North American borders. Powdered aluminium from Tennessee is turned into rods in Pennsylvania, before crossing the border so the rods can be shaped and polished in Canada, then taken to Mexico to be assembled into pistons, before crossing back into the US

The fentanyl dealer from Los Angeles stands to the side watching carefully as a Mexican drugs cartel operative prepares his latest shipment. The synthetic opioid drug is wrapped in foil, sealed in plastic, then dropped with an oily splash into the petrol tank of the trafficker’s nondescript car.

Jay, not his real name, had crossed earlier from the US to this cartel-run safe house on the Mexican side of the border. The house looks like any other in this neighbourhood. We are told to drive in quickly and an iron gate closes firmly behind us. They don’t cook the drug here, but still they are wary of attracting attention. The men all speak in hushed voices and work quickly.

Their lethal business has become the centre of a dispute causing shockwaves in the global economy after the White House used fentanyl smuggling through US borders as a key justification for raising tariffs. US President Donald Trump has also vowed to “wage war” on the drug cartels.

The BBC gained rare access to a cartel’s operation along the border and travelled to the US to meet their ultimate customers, to see if the international row was doing anything to halt the illegal flow of narcotics.

The men we meet at the safe house are foot-soldiers of a well-known cartel. Two of them loading the car admit to fleeting moments of remorse. But when I ask the man packing the drugs into the fuel tank if he feels guilty about the deaths the pills cause, he sniggers. “We have family too, of course we feel guilty. But if I stop, it’s going to continue. It’s not my problem,” he tells me with a shrug.

The men keep their faces covered while they remove the back seat of the car to gain access to the tank, taking care not to spill petrol. The smell inside the car could alert customs officers on the other side of the border that the fuel tank has been tampered with.

The light green pills, 5,000 in total and marked with an M, are packed tightly – a fraction of what Jay says he sells every week in LA and across the American northwest.

“I try to get 100,000 pills a week, every week,” the softly spoken dealer tells me. “I don’t send them in one vehicle. I try to spread it in different cars. That way I minimise my risk of losing all my pills.”

A 25% tariff on all goods from Mexico was introduced in response to what President Donald Trump said was the unacceptable flow of illegal drugs and illegal immigrants into the US. Some of those tariffs have since been delayed until 2 April.

Defeating the fentanyl trade is one of President Trump’s top policy goals, but Jay doesn’t rate his chances.

“Last time he was in office, he tried to do the same thing, and it never happened. There’s always going to be a demand. And where’s the biggest demand? United States, lucky for us. We’re here in the border,” says Jay with a smile.

There is so much of the drug flowing into the US, most of it coming from Mexico, that according to Jay the price he sells it for in LA has fallen from about $5 or $6 per pill a year ago, to $1.50 now (£1.16).

Mexican police say cartels switched in a big way to fentanyl, which is 50 times more potent than heroin, because unlike other opiates – which are made from the opium poppy – it is completely synthetic and much easier to make and transport.

Fentanyl’s strength and addictiveness has left a deep scar on American society: drug overdoses kill more people in the US than guns or car crashes. Fatalities have started to decline, perhaps in part to the greater availability of Naloxone, a drug that reverses the effects of overdoses of opioids. But the latest figures are still stark: 87,000 overdose deaths (mostly from opioids) from October 2023 to September 2024, down from 114,000 the year before.

In an attempt to stave off punitive tariffs from the White House, Mexican President Claudia Sheinbaum has pledged to send 10,000 National Guard troops to the border. The government has made more than 900 arrests since October in Sinola, a major drug trafficking hub. Back in December, Mexico announced its biggest ever fentanyl seizure in the state: more than a tonne of pills. In fact, the country has seized more fentanyl in the past five months than it did in the previous year.

Mexico has also made it harder to import a key ingredient of fentanyl from China, prompting cartels to reduce the strength of each pill – and, in the process, making them less deadly.

And at the end of February, 29 senior drug cartel figures were handed over to the United States, including members of five of the six Mexican crime syndicates that President Trump’s administration recently designated as terrorist organisations.

President Sheinbaum also said she had agreed to the CIA increasing surveillance drone operations over Mexican territory in search of fentanyl drugs labs, after the media revealed the covert missions.

President Sheinbaum has also recently emphasised the demand side of the crisis, saying the US fentanyl crisis began with the legal but “irresponsible approval” of painkillers, such as OxyContin, starting in the late 1990s. “The US government should take responsibility for the opioid-consumption crisis that has caused so many deaths,” she said at a daily news conference.

In Philadelphia’s Kensington neighbourhood – dubbed the largest open-air drugs market on the US east coast – Rosalind Pichardo of Operation Save Our City is on to her second Bible. She records in the book’s back pages the number of times she has reversed an opioid overdose using the quick-acting drug Naloxone.

For the past six years, the figure totals 2,931. She flicks through the pages and that number written in red comes alive with the memories of the individuals she saved, and the ones she lost.

She begins to list: “Male in his 60s… male 30s… female in her 30s, very thin, no hair.” Beside each name in this roll-call of fentanyl victims, is the number of doses of Naloxone – sold under the name Narcan – she used to attempt to revive people.

In Kensington, drugs are cheap and plentiful, and people shoot up in the open. As she walks the neighbourhood, Ms Pichardo finds people passed out on the pavement, a woman in a stupor with her trousers down, a man lying prone next to a metro turnstile, another man in a wheelchair, his eyes closed and money in his hands.

He, like a growing number of opioid users, has had a limb amputated. A new drug on the street, the animal tranquilliser Xylazine, is being mixed with fentanyl. It leads to open wounds which become infected. The air is rank in places.

John White is 56 years old, and for 40 of those years he has struggled with addiction. At Sunshine House, Ms Pichardo serves him a bowl of homemade soup.

“I’ve been in this city all my life,” he says. “The fentanyl and opioid epidemic is the worst I’ve ever seen. Fentanyl will get you so hooked that you have to get more. So they put it in everything.”

Mr White had a fentanyl overdose after smoking a joint laced with the drug: it is being added to all kinds of illicit drugs, including heroin, cocaine and marijuana.

Ms Pichardo holds out little hope that even if the fentanyl trade is cut off from Mexico that it will improve people’s lives in Kensington.

“The problem that we have with the war on drugs is – it didn’t work then [and] I don’t believe it’s going to work now,” she explains.

When the supply of one drug is cut off, another replaces it, she says. “Once there was heroin, now there’s no more. Now there’s fentanyl. When there’s no fentanyl, now it’s going to be Xylazine. So it’s like they’ll find a way to keep people addicted so that people can make money off of people, off the suffering of people,” says Ms Pichardo.

Directly across from Sunshine House, a young woman is found collapsed on the pavement, her body splayed across the concrete: she’s unresponsive. Ms Pichardo is quickly on the scene, her medical kit by her side, yet again administering Naloxone. The woman is eventually revived – she will survive.

Roz Pichardo returns to Sunshine House, another life saved and another digit to be added to the back pages of her tattered Bible.

Top picture: Darren Conway, BBC