☕ What you need to know about tariffs

It’s Monday.

There are some new terms we need to be across - trade wars and tariffs. In the lead up to President Trump’s election to the White House, he promised the sweeping measures. Sure enough, within the first few weeks of his presidency, they’re here.

I’ve got 30 seconds

Some headlines from this morning:

🛬 Over the weekend, investigators announced the helicopter involved in the fatal crash near Reagan National Airport was flying higher than authorized, and the air traffic controller was handling two roles. Officials confirmed 55 of 67 bodies have been recovered, with the rest expected to be found. Investigators are still examining the black boxes, which record flight data, and noted discrepancies in the actions of both aircraft prior to the crash that still need to be addressed. Families of the victims have visited the sight of the horrific crash today.

📉 European stock markets have tumbled after Donald Trump announced the US will “definitely” impose trade tariffs on the EU, after already announcing tariffs on Canadian, Mexican and Chinese goods (we’ll explain more about these taxes further down the newsletter). Germany, the largest economy in the EU, is likely to be the hardest hit. Stock markets also fell sharply in Asia, also due to the potential of tariffs further than the Chinese taxes.

🏀 Slovakian superstar Luka Doncic, hailed as one of the NBA’s newest generational talents, has been traded by the Dallas Mavericks to the Los Angeles Lakers for 10-time All Star Anthony Davis. The trade has shocked the basketball world as the Mavericks were always expected to build their franchise around the 25-year-old Slovakian, who is currently injured but expected to return this season. The trade also involved the Utah Jazz, who received a 2025 second-round draft pick from both teams as well as shooting guard Jaleen Hood-Schifino.

🎙️ Beyonce has made Grammys history, becoming the first Black woman to win in the best country album category for Cowboy Carter. The singer also won the biggest award of the night, Album of the Year. It’s the fifth nomination she’s received in the category, but the first time she’s won it. Beyoncé is also the most awarded artist in Grammys history, with 34 wins from 99 nominations throughout her career. She is now the fourth Black woman to win Album of the Year at the Grammys.

I’ve got 1 minute

Two top security officials from USAID have been placed on administrative leave after attempting to block Department of Government Efficiency (DOGE) representatives from accessing internal systems. Now, there’s speculation the entire agency may be shut down. Here’s some context, and what might happen next.

What is USAID?

Since 1961, USAID has provided foreign aid across the world to promote development and humanitarian programs in an initiative established by President John F. Kennedy. Originally designed to counter Soviet influence during the Cold War, it is now viewed as a counterweight to China's Belt and Road Initiative, a parallel program.

What happened?

On Saturday night, multiple representatives from the Department of Government Efficiency (known as DOGE), an organization established by the Trump administration last week and led by Elon Musk, accessed USAID internal systems. Musk had previously said President Trump had agreed USAID needs to be “shut down”.

Initially, USAID security director John Voorhees and his deputy, Brian McGill, restricted the attempted access, despite DOGE staff threatening to call the US Marshall. They were soon suspended and placed on leave

USAID Chief of Staff Matt Hopson also resigned over the weekend after just a few days in the position.

Senator Shaheen, a ranking member of the Senate Foreign Relations Committee, expressed concern that DOGE staff might not have had appropriate security clearance, stating, “[The Senate is] seeking immediate answers about any implications for national security.” DOGE officials said, “No classified material was accessed without proper security clearances.”

What could happen next?

The suspensions followed the Trump administration suspending 60 USAID officials and firing hundreds of contractors.

DOGE’s mandate is to limit government expenditure, reducing US debt. These actions are seen as part of the Trump administration’s effort to limit US foreign aid, hence limiting government spending.

An executive order by President Trump last week saw Secretary of State Marco Rubio freezing over $70 billion of foreign aid previously approved by Congress.

The actions against USAID officials add to reports that USAID could be incorporated into the State Department with a drastically reduced function.

Some Democrats are signaling a constitutional challenge, stating the President cannot interfere with funding for agencies approved by Congress.

I’ve got 2 minutes

Over the weekend, President Trump signed a tranche of executive orders that imposed new tariffs on America’s three largest trading partners - Canada, Mexico and China. Trump had promised to impose the tariffs as part of his electoral bid, but many have been caught off-guard with the speed of the implementation. Here’s what you need to know.

What are tariffs?

A tariff is a tax placed on imported goods or services. It’s often categorised by where the good or service is coming from (say a tariff on all imports from Russia) or the type of item it is (say a tariff on all imported red wine). Tariffs are applied for political reasons, such as tariffs placed on Russian goods in an attempt to deter its government from doing certain things. The U.S. applied high tariffs to Russian goods after it invaded Ukraine in 2022.

The new tariffs

Under the three new regimes, all goods from Canada and Mexico (except Canadian energy products) will now be subject to a 25% tariff. All goos from China will be subject to a 10% tariff. Canadian energy products will also face a 10% tariff.

In response, both Canada and Mexico announced they would impose similar products on US goods. It’s not certain how China will respond to the move, but it is expected to follow the other two nations and retaliate with some form of economic measure.

Why?

President Trump said the tariffs were being imposed due to his concerns about illegal immigration and drug trafficking. The executive order itself was titled: “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border.”

By imposing tariffs on the goods that come in from other countries, the Trump administration said it hopes the US economy will be boosted by suppliers preferring to produce goods within the country, and consumers choosing US products that would potentially now be cheaper than foreign products (China, Mexico and Canada account for 40% of goods imported into the US last year).

Who actually pays for tariffs?

Typically, tariffs are practically absorbed by domestic importers when they pay the fee to US Customs and Border Protection upon receiving their goods. However, most economists agree most of the inflated cost is passed on to consumers, after sellers increase the prices of goods they’re importing. Based on a 2024 study by the Peterson Institute for International Economics, the three tariffs could increase prices for US consumers by an average of $2600 per year.