Answering Your Questions About Trump’s Vast New Tariffs 

Trucks with containers drive through a logistic-terminal in Leipzig, Germany, Monday, April 7, 2025. (dpa via AP)
Trucks with containers drive through a logistic-terminal in Leipzig, Germany, Monday, April 7, 2025. (dpa via AP)
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Answering Your Questions About Trump’s Vast New Tariffs 

Trucks with containers drive through a logistic-terminal in Leipzig, Germany, Monday, April 7, 2025. (dpa via AP)
Trucks with containers drive through a logistic-terminal in Leipzig, Germany, Monday, April 7, 2025. (dpa via AP)

After weeks of anticipation and speculation, President Donald Trump followed through on his tariff threats this week by declaring a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States.

Global markets cratered the day after the announcement and then fell further when China announced it would retaliate with tariffs equal to the ones the US is imposing.

In announcing what he has called reciprocal tariffs, Trump was fulfilling a key campaign promise by raising US taxes on foreign goods to narrow the gap with the tariffs the White House says other countries unfairly impose on US products.

Trump's higher rates would hit foreign entities that sell more goods to the United States than they buy. But economists don’t share Trump’s enthusiasm for tariffs since they’re a tax on importers that usually get passed on to consumers. It’s possible, however, that the reciprocal tariffs could bring other countries to the table and get them to lower their own import taxes.

The Associated Press asked for your questions about reciprocal tariffs. Here are a few of them, along with our answers:

What is Trump trying to accomplish with his tariffs? It is often unclear what the president’s endgame is, which adds to the uncertainty surrounding his trade wars. He has given different reasons for his sweeping import taxes, and sometimes they contradict each other.

Trump has said that tariffs can raise money for the US Treasury, protect US industries, draw factories to the United States and serve as a negotiating tactic to get other countries to bend to his will, whether it means getting them to reduce their own tariffs or to crack down on the illegal flow of drugs and immigrants into the United States.

But if tariffs mean Americans buy fewer imports or if companies relocate factories to the United States, then revenue from tariffs will fall, undercutting his plan to use them as a money generating alternative to the income tax.

Trump and his own aides have also offered competing explanations for the sweeping “reciprocal’’ tariffs he announced Wednesday.

The president on Thursday said the levies “give us great power to negotiate’’ and were coaxing other countries into offering to lower their own trade barriers. “Every country is calling us,” Trump said. “That’s the beauty of what we do. We put ourselves in the driver’s seat.”

The same day, White House trade adviser Peter Navarro told CNBC that the tariffs were meant to stay: The idea is to get companies to produce goods in America, not abroad, bringing down longstanding US trade deficits. “Let me make this very clear,” he said. “This is not a negotiation. This is not that. This is a national emergency.”

What is currency manipulation? Currency manipulation takes place when a country deliberately pushes the value of its currency lower, which makes its companies’ exports cheaper in foreign markets and gives them an unfair competitive advantage. It can do this buy selling its own currency and buying another country’s – usually the US dollar – in foreign exchange markets.

In announcing sweeping tariffs this year, Trump has accused other countries of using this tactic to gain an unfair edge over American companies. China, in particular, was notorious for years for manipulating its currency lower to boost exports. But last November the Biden administration’s Treasury Department concluded that “no major US trading partner” had manipulated its currency to gain an unfair advantage in the fiscal year that ended in June 2024.

The US dollar’s status as the world’s “reserve currency” – used far more than others in global commerce – tends to keep its value high, which can put US exporters at a disadvantage.

How were the tariffs imposed by Trump calculated? Do other countries really have such high tariffs? According to the Trump administration, the European Union's tariffs and trade barriers against the US amount to a 39% tariff on US goods, while China's, it says, are 67%, and India's 52%.

Those are much higher than what other sources say. The World Trade Organizations puts the EU's average tariffs on all imports at 2.7%, China's at 3%, and India's at 12%.

The Trump administration says it is including currency manipulation, government subsidies, and other barriers to trade in its calculations. Trump said Wednesday he was being “kind” and then charging half what other countries imposed on the US. So the US will as of April 9 impose 20% duties on imports from Europe, 26% on India, and 34% on China. For China, that's in addition to other duties, which means some Chinese goods will face duties as high as 79%.

Many countries do take other steps besides tariffs to restrict access to their markets. The EU, for example, restricts imports of hormone-treated beef from the US. And the US government has long complained that China doesn't protect intellectual property, such as software made by American companies.

Still, those factors don't explain how the administration came up with such high numbers for other countries' tariffs. Instead, the White House says it did a simple calculation: It took the size of each country’s trade imbalance on goods with the United States and divided that by how much America imports from that nation.

It then took half that percentage and made it the new tariff rate.

Do US-collected tariffs go into the General Revenue Fund? Can Trump withdraw money from the fund without oversight? Tariffs are taxes on imports, collected when foreign goods cross the US border by the Customs and Border Protection agency. The money — about $80 billion last year — goes to the US Treasury to help pay the federal government’s expenses. Congress has authority to say how the money will be spent.

Trump — largely supported by Republican lawmakers who control the US Senate and House of Representatives — wants to use increased tariff revenue to finance tax cuts that analysts say would disproportionately benefit the wealthy. Specifically, they want to extend tax cuts passed in Trump's first term and largely set to expire at the end of 2025. The Tax Foundation, a nonpartisan think tank in Washington, has found that extending Trump’s tax cuts would reduce federal revenue by $4.5 trillion from 2025 to 2034.

Trump wants higher tariffs to help offset the lower tax collections. Another think tank, the Tax Policy Center, has said that extending the 2017 tax cuts would deliver continued tax relief to Americans at all income levels, “but higher-income households would receive a larger benefit.”

How soon will prices rise as a result of the tariff policy? It depends on how businesses both in the United States and overseas respond, but consumers could see overall prices rising within a month or two of tariffs being imposed. For some products, such as produce from Mexico, prices could rise much more quickly after the tariffs take effect.

Some US retailers and other importers may eat part of the cost of the tariff, and overseas exporters may reduce their prices to offset the extra duties. But for many businesses, the tariffs Trump announced Wednesday — such as 20% on imports from Europe — will be too large to swallow on their own.

Companies may also use the tariffs as an excuse to raise prices. When Trump slapped duties on washing machines in 2018, studies later showed that retailers raised prices on both washers and dryers, even though there were no new duties on dryers.

A key question in the coming months is whether something similar will happen again. Economists worry that consumers, having just lived through the biggest inflationary spike in four decades, are more accustomed to rising prices than they were before the pandemic.

Yet there are also signs that Americans, put off by the rise in the cost of living, are less willing to accept price increases and will simply cut back on their purchases. That could discourage businesses from raising prices by much.

What is the limit of the executive branch’s power to implement tariffs? Does Congress not play any role? The US Constitution grants the power to set tariffs to Congress. But over the years, Congress has delegated those powers to the president through several different laws. Those laws specify the circumstances under which the White House can impose tariffs, which are typically limited to cases where imports threaten national security or are severely harming a specific industry.

In the past, presidents generally imposed tariffs only after carrying out public hearings to determine if certain imports met those criteria. Trump followed those steps when imposing tariffs in his first term.

In his second term, however, Trump has sought to use emergency powers set out in a 1977 law to impose tariffs in a more ad hoc fashion. Trump has said, for example, that fentanyl flowing in from Canada and Mexico constitute a national emergency and has used that pretext to impose 25% duties on goods from both countries.

Congress can seek to cancel an emergency that a president declares, and Sen. Tim Kaine, a Democrat from Virginia, has proposed to do just that regarding Canada. That legislation could pass the Senate but would likely die in the House. Other bills in Congress that would also limit the president's authority to set tariffs face tough odds for passage as well.



Dollar Rides Haven Demand as Middle East Talks Ring Hollow

An electronic panel displays US Dollar currency symbol at an exchange office in Podolsk, outside Moscow, Russia, 26 March 2026. (EPA)
An electronic panel displays US Dollar currency symbol at an exchange office in Podolsk, outside Moscow, Russia, 26 March 2026. (EPA)
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Dollar Rides Haven Demand as Middle East Talks Ring Hollow

An electronic panel displays US Dollar currency symbol at an exchange office in Podolsk, outside Moscow, Russia, 26 March 2026. (EPA)
An electronic panel displays US Dollar currency symbol at an exchange office in Podolsk, outside Moscow, Russia, 26 March 2026. (EPA)

The dollar hovered near multi-month peaks on Friday as investors sought safety in the shadow of an intensifying Middle East war and mounting doubts over any path to de-escalation.

Markets were on edge following another rollercoaster week as US President Donald Trump again extended a deadline for striking Iran's energy facilities into April, even as Washington and Tehran offered starkly conflicting accounts of diplomatic progress.

The Pentagon is also looking at sending up to 10,000 additional ground troops to the Middle East, the Wall Street Journal reported on Thursday, doing little to bolster investor hopes ‌of an imminent ‌end to the war.

That kept the dollar bid ‌as ⁠investors flocked to ⁠the safe-haven currency and ramped up expectations of a US rate hike by the year-end, owing to the inflationary pulse from higher-for-longer energy prices.

The yen, on the other hand, was left on the cusp of 160 per dollar and stood at 159.58. The euro was nursing losses and tacked on 0.1% to $1.1540, while sterling was little changed at $1.3339.

"It doesn't look like the conflict will end anytime soon," said Carol Kong, a ⁠currency strategist at Commonwealth Bank of Australia. "The dollar is king while ‌this conflict lasts."

"If we're right about this ‌conflict being protracted, I think oil prices will just keep rising and it will ‌push the dollar higher, at the expense of net energy importers like the Japanese ‌yen and the euro," she added.

The darkening market mood sent the risk-sensitive Australian dollar down to a two-month trough, though it later rebounded and traded 0.2% higher at $0.6903. The New Zealand dollar languished near its lowest level since January and last stood at $0.5769.

Against a basket ‌of currencies, the dollar was marginally weaker at 99.83, but still on track for a 2.2% rise this month, which would ⁠mark its ⁠biggest gain since July last year.

Investors are now pricing in an over 40% chance of a 25-basis-point rate hike from the Federal Reserve by September, according to CME Fedwatch tool, in a sharp reversal from more than 50 bps worth of easing expected before the war.

The Bank of England and the European Central Bank are also seen tightening policy, with the hawkish sea change in rate expectations hammering bonds and sending yields rising.

"A more prolonged disruption to energy supplies would deliver a larger hit to activity that would meet most definitions of a global recession and prompt a broader monetary tightening cycle," said analysts at Capital Economics in a note.

Yields on US Treasuries edged slightly higher on Friday, following a sharp rise overnight, with the two-year yield at 3.9899%. The benchmark 10-year yield was up about 1 bp to 4.4278%.


Oil Drops as Trump Pauses Iran Strikes, but Stock Traders Nervous

Donald trump said he had pushed back the deadline for Iran to reopen the Strait of Hormuz once again following a request from Tehran. IRIB TV/AFP
Donald trump said he had pushed back the deadline for Iran to reopen the Strait of Hormuz once again following a request from Tehran. IRIB TV/AFP
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Oil Drops as Trump Pauses Iran Strikes, but Stock Traders Nervous

Donald trump said he had pushed back the deadline for Iran to reopen the Strait of Hormuz once again following a request from Tehran. IRIB TV/AFP
Donald trump said he had pushed back the deadline for Iran to reopen the Strait of Hormuz once again following a request from Tehran. IRIB TV/AFP

Oil prices fell Friday after Donald Trump again pushed back a deadline for Iran to reopen the Strait of Hormuz, though most equities also dropped as traders shrugged at the news following a series of conflicting messaging from the White House.

The US president had warned last Saturday he would obliterate Iran’s energy sites if it did not unblock the crucial waterway within 48 hours but pushed that back five days citing positive peace talks, which Tehran denied had taken place.

But after days of strikes by both sides and mixed reports of negotiations -- including the trading of multi-point demands -- he announced Thursday that he would again delay the attacks to April 6 after a request from Tehran.

"Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well," Trump posted on his Truth Social platform.

"As per Iranian Government request... I am pausing the period of Energy Plant destruction by 10 Days to Monday, April 6, 2026, at 8 P.M., Eastern Time," he posted.

Trump had earlier denied he was desperate for a deal to end the war, despite the Iranian republic's cool response to an American peace plan and fears the spike in oil prices would fan inflation, said AFP.

Trump later told a cabinet meeting Iran had allowed 10 oil tankers passage through the Strait of Hormuz -- through which about a fifth of world oil and gas pass -- to show it was serious about talks.

The Iranian news agency Tasnim said the country's response to Washington's 15-point plan to end the war "was officially sent last night through intermediaries, and Iran is awaiting the other side's response".

The report, citing an unnamed official, said officials had called for an end to US-Israeli attacks on Iran and Tehran-backed groups elsewhere in the region.

It also called for war reparations and Iran's "sovereignty" over the Strait of Hormuz be respected.

However, Trump's announcement came as the Wall Street Journal cited Department of Defense officials as saying the Pentagon was considering sending as many as 10,000 extra ground troops to the Middle East.

Oil prices fell more than one percent Friday, though that only partially pared the previous day's surge amid growing anxiety that the conflict will last far longer than first thought.

Brent is up almost 50 percent since the war began on February 28, while West Texas Intermediate has risen around 40 percent.

Equities struggled following hefty losses in Wall Street.

Tokyo and Seoul, which had been the standout performers in the first two months of the year, were among the biggest losers, while Hong Kong, Sydney, Wellington, Taipei Jakarta and Manila were also sharply lower.

Shanghai and Singapore fluctuated.

Investors are also increasingly skeptical about the messaging from the White House, with Trump often flipping between threats and talk of peace.

"A ten-day extension sounds like breathing room, but in market terms, it feels more like a trader rolling a losing position forward, hoping the next candle delivers what the last one refused to give," said SPI Asset Management's Stephen Innes referring to an investors analysis tool.

"Time has been purchased, not clarity. And the market knows the difference."

And National Australia Bank's Ray Attrill said: "Whether peace talks are taking place between the US and Iran remains debatable, Iran insisting that exchanges of letters via a friendly intermediary (presumed to be Pakistan) does not constitute talks."

Meanwhile, the World Trade Organization warned the global trading system was experiencing the "worst disruptions in the past 80 years", while the World Bank said it was prepared to provide immediate financial assistance to emerging market countries.

That came as the Organization for Economic Cooperation and Development warned US inflation could hit more than four percent this year as a result of the spike in crude prices. That compares with its previous projection of 2.8 percent.

The prospect of another spike in the cost of living led several Federal Reserve officials to express concern about the outlook for the world's top economy and suggested interest rates were unlikely to come down any time soon.

With the economic impact worsening, governments around the world are being forced to act.

Spain approved a sweeping $5.8 billion package including steep cuts to energy taxes, while Poland's prime minister announced a series of measures to address soaring fuel costs, including reduced taxes and price ceilings.

And South Korea said it will roll out a $17 billion "wartime" supplementary budget and expand fuel tax cuts.


Cryptocurrencies Aiding Iran during War

Iranian civilians are turning en masse to bitcoin, which can be stored in personal wallets beyond the authorities' reach. SEBASTIEN BOZON / AFP/File
Iranian civilians are turning en masse to bitcoin, which can be stored in personal wallets beyond the authorities' reach. SEBASTIEN BOZON / AFP/File
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Cryptocurrencies Aiding Iran during War

Iranian civilians are turning en masse to bitcoin, which can be stored in personal wallets beyond the authorities' reach. SEBASTIEN BOZON / AFP/File
Iranian civilians are turning en masse to bitcoin, which can be stored in personal wallets beyond the authorities' reach. SEBASTIEN BOZON / AFP/File

Since the start of the Middle East conflict, Iran has witnessed massive cryptocurrency flows.

Experts say they are being used to circumvent sanctions placed on Iran's Revolutionary Guards as well as a financial safe haven by civilians hit by soaring inflation.

AFP examines how exactly digital currencies are being used in the country.

- Millions of dollars -

In an unusually large movement, more than $10 million worth of cryptocurrencies left Iranian exchange platforms between February 28 -- the first day of Israeli-US airstrikes -- and March 2, according to data analytics firm Chainalysis.

By March 5, nearly one-third of these funds had been transferred to foreign exchanges.

While some of this exodus can be explained by citizens rushing to protect their savings, the sheer size of the sums involved suggests the involvement of "regime actors", Kaitlin Martin of Chainalysis told AFP.

Such action would likely occur out of fear of further sanctions or cyberattacks, according to experts.

In June 2025, at the height of the previous Israel-Iran conflict, leading cryptocurrency platform Nobitex had $90 million stolen by hackers linked to Israel, according to blockchain company TRM Labs.

- Iran implicated -

According to Chainalysis, several digital wallets used during this surge in cryptocurrency activity are directly linked to the Revolutionary Guards.

"Even during these internet outages some outflows are seen, suggesting that some have access to the exchange's cryptoasset holdings even when its website is inaccessible," noted cryptocurrency analysts Elliptic.

The state's grip is massive. Last year, wallets associated with the Guards were funded with more than $3 billion in cryptocurrencies, representing more than half of the country's cryptocurrency flows -- a share that continues to grow according to Chainalysis.

- 'Shadow banking' -

For Iran, largely cut off from the traditional financial system by international sanctions, cryptocurrencies are an alternative channel -- allowing the state to sell embargoed oil or to discreetly finance allied armed groups, such as the Houthis in Yemen according to US authorities.

The Financial Times earlier this year reported that Iran offered ballistic missiles, drones and other advanced weapons systems for sale using cryptocurrencies.

These digital assets contribute to a veritable "shadow banking", Craig Timm of the anti-money laundering organization ACAMS, told AFP.

Quicker to send and less expensive than a bank transfer, cryptocurrencies are difficult to trace owing also to loopholes in global regulations, he added.

- 'Lifeline' -

The Revolutionary Guards and Iranian central bank favor "stablecoins" -- digital currencies generally pegged to the dollar in a bid to avoid volatility.

But civilians are turning en masse to bitcoin, the world's leading cryptocurrency, which can be withdrawn from platforms and stored in personal wallets, beyond the authorities' reach.

Bitcoin currently trades for more than $68,000.

This strategy was already widely evident during brutally suppressed protests in Iran ahead of the war, according to Chainalysis.

In a country where inflation was already nearing 50 percent before the conflict started, cryptocurrencies are acting as a "lifeline" for the population in the face of the collapse of the national currency, said analyst Martin.