Good morning. Two hours ago, as Donald Trump’s tariffs went into effect, China announced its response: tariffs of its own on key US imports, export controls on critical minerals, and an investigation into Google over allegations of breaking anti-monopoly laws. Yesterday, tariffs against Canada and Mexico were suspended at the last minute – but the trade war has started, and as the news from Beijing makes clear, they tend to be much harder to stop.
Meanwhile, the EU is bracing itself for similar measures, and the UK is breathing a sigh of relief that it appears to have been excluded, for now. Even some of Trump’s supporters are nervous: the Wall Street Journal editorial column, usually a staunch supporter of the president, branded all this “the dumbest trade war in history”.
After sharp falls yesterday, the markets recovered somewhat at the news of Mexico and Canada’s reprieve. But it is entirely possible that Trump will have another change of heart, and there are reasonable questions about the true value of the concessions he has secured on border controls in the meantime. Today’s newsletter takes you through the retaliations and reprieves, and what might happen next. Here are the headlines.
Five big stories
UK politics | Keir Starmer is facing a growing internal backlash over the potential approval of a giant new oilfield, after Treasury sources indicated Rachel Reeves was likely to give it her backing. The proposed Rosebank development was given the go-ahead in 2023 but was ruled unlawful by a court last week.
Health | The proportion of people with lung cancer who have never smoked is increasing, with air pollution an “important factor”, the World Health Organization’s cancer agency has said. Lung cancer among those who have never smoked is now estimated to be the fifth highest cause of cancer deaths worldwide.
UK news | A 15-year-old boy has died after being stabbed at a school in Sheffield. Another 15-year-old boy was arrested on suspicion of murder after the incident at All Saints Catholic high school, South Yorkshire police said.
Obesity | Access to weight-loss jabs through online pharmacies is to be tightened as part of a crackdown on inappropriate prescriptions. The changes mean pharmacies can no longer base decisions about online prescriptions of drugs like Wegovy or Mounjaro on the information provided solely in an online questionnaire.
Espionage | Daniel Khalife, a former soldier, has been sentenced to more than 14 years in custody for spying for Iran and escaping from prison. In September 2023, Khalife, 23, sparked a high-profile manhunt when he broke out of HMP Wandsworth by clinging to the underside of a food delivery truck.
In depth: A conflict which most experts say will have no winners
A quick reminder: tariffs are a type of tax imposed on goods moving across national borders. (Philip Wen wrote a handy explainer in November.) Proponents argue that when tariffs are used effectively, they can give an advantage to locally sourced alternatives by making imports prohibitively expensive.
But economists tend to view them as a blunt instrument – which certainly hurt the target country, but also do damage to the host economy and risk sparking a trade war that can magnify the consequences.
Here’s a guide to the state of play on Trump’s threats, and how they may pan out.
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China | A counterattack ranging from pick-up trucks to search engines
Trump threatened a 60% tariff on Chinese goods during the election campaign; the actual figure, 10%, is much lower, but when added to existing measures brings the average tariff on Chinese goods to between 20% and 30%. Trump claims that his intention is to force Beijing to do more to stop fentanyl, a dangerous opioid, and its precursors from being smuggled into the US – but most observers see a much wider economic agenda in play.
About 14% of Chinese exports are destined for the US, somewhat limiting the effect of Trump’s measures. And as Amy Hawkins and Helen Davidson explained in November, many Chinese companies had already started moving their supply chains overseas to get around existing tariffs.
Nonetheless, the response China set out this morning was forceful: 15% tariffs on coal and liquefied natural gas, and 10% on crude oil, farm equipment, large-displacement vehicles and pickup trucks from the US. It also imposed export controls on materials like tungsten and tellurium which have important commercial applications in the US. Its anti-trust investigation into Google could prove more consequential still if it is a precursor to a wider assault on US tech firms that operate in China.
The impact of all this is complicated and hard to predict. But it may mean that the two biggest economies in the world accelerate their retreat into their own spheres of influence. The consequences of that kind of divergence will be felt far beyond the US and China alone.
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Mexico | ‘Obviously it’s a relief. But the damage is done’
With the US receiving 83% of Mexican goods exports, the impact of Trump’s threatened tariffs would be profound. But yesterday, the two sides agreed a deal to “pause” the tariffs for a month.
Again, most observers view the tariffs as largely motivated by Trump’s conviction that the US should not be running trade deficits – a position which, as the economist Paul Krugman explains here, discounts the possibility that policy designed to reverse them may also slow foreign investment. In theory, though, the tariffs against Mexico are intended to stop an “intolerable alliance” between the country’s government and organised crime groups and to stop illegal immigration and cross-border fentanyl trafficking.
Mexico’s president, Claudia Sheinbaum, rejected the first claim as “slanderous”. But she did agree to send 10,000 troops to the border, while the US has said it will work to prevent high-powered weapons being transferred the other way.
The last few days will have left a real scar whatever happens next. Brian Winter, a Latin America expert, told Tom Phillips: “Obviously it’s a relief. But the damage is done ... if companies make decisions in terms of years and decades, how they think about Mexico specifically, and its place in the US value chain, is for ever changed.”
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Canada | New border plan brings last-minute reprieve
The pause on tariffs against Canada came even later than the reprieve for Mexico, and followed two phone calls between Trump and the Canadian prime minister Justin Trudeau yesterday.
Trump’s claim that his plan was intended to stop the import of fentanyl looks risible at the US’s northern border: only 19kg of the drug was seized by US border agents last year, against 9,600kg from Mexico. But confusion over what the real purpose is may be strangely useful to Trump in both cases, since it allows him to declare victory without any external benchmark of what that would look like. Trudeau said yesterday that Canada would add to previous measures by deploying new technology and personnel on the border, appointing a fentanyl czar, and listing cartels as terrorists.
News of a pause was a huge relief for Canadians: nearly as high a proportion of the country’s exported goods go to the US as Mexico’s, about 77% in 2022. Canada had planned to match Trump’s threatened 25% tariffs on $106bn worth of US goods, predominantly those made in Republican-leaning states.
There have also been signs of a protest movement among ordinary Canadians: as well as a campaign encouraging people to buy Canadian, Leyland Cecco reports here, tens of thousands of hats with the slogan “Canada Is Not For Sale” have been sold, and those who appear sympathetic to Trump are being branded “Vichy Canadians”.
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European Union | Plans for “carrot and stick” approach
Trump’s threat that new tariffs on the EU will “definitely happen” is premised on his complaint that “they don’t take our cars, they don’t take our farm products, they take almost nothing and we take everything from them”. He also said: “They’ve really taken advantage, you know, we have over $300bn deficit.” He later put the figure at $350bn.
It is true that the US has a trade deficit in goods with the EU, but the most recent figure available says that it was about €156bn ($160bn) in 2023. Yesterday morning, Polish foreign minister Radosław Sikorski argued that services should also be considered when assessing the balance of trade between the US and EU: Eurostat data for 2023 shows a US surplus in services of €104bn ($107bn), presenting a very different overall picture to Trump’s claim.
In this useful analysis from last month, Jennifer Rankin reports that the European Commission, which leads on trade policy across the bloc, has been preparing a “carrot and stick” approach – with retaliatory tariffs on US goods on one side and offers to buy more US goods on the other. On the “carrot” side, Brussels has said it is ready to negotiate on buying more US liquified natural gas to replace Russian imports.
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UK | A choice between trading partners?
Trump told the BBC that he “might” impose tariffs on the UK, but that it could be “worked out”, noting that Keir Starmer “has been very nice”. While that sounds like good news for Starmer for now, it is a long way from a guarantee that the UK will be excluded from US tariffs in the future.
Even if Trump does change his mind, the UK is somewhat less vulnerable to tariffs than some other countries: of £183bn exports last year, 68% was in services, data from the Office for National Statistics says. Tariffs are generally only applied to goods.
Because the UK is a much less important trading partner to the US than the EU is – just 2.1% of all US imports come from the UK – any retaliatory tariffs would be likely to have less impact. In this December report for the Resolution Foundation, Emily Fry and Sophie Hale write: “For the UK in isolation, the least-bad option might be living with tariffs, while being measured and selective about any retaliation, so that Britain’s businesses and consumers continue to benefit from £58bn of annual imports from the US.”
But the UK may also eventually face a choice about which side to join in the event of an escalating trade war – and the same report notes that because the UK’s biggest trading partner by a margin is the EU, “unilateral openness could be hard to sustain if the EU became anxious about the UK being a backdoor for goods from the US and beyond”.
What else we’ve been reading
Alexis Petridis’s commentary on the 2025 Grammys is on point, particularly where he notes that pop music is once again having an impact on broader culture, where it was previously thought to have been dislodged by social media. And that’s whether or not you agree with the winners and losers. Jason Okundaye, assistant editor and writer, newsletters
I loved Jess Cartner-Morley’s perceptive piece on the Trump set’s style choices. She describes the president as a “buffalo painted by Holbein” but also warns that “to sneer and sniff at an aesthetic that rips up the establishment rulebook plays directly into Trump’s hands”. Archie
I have always wondered what it must be like to perform and watch your own (fictional) death, so I’m grateful to Michael Hogan for his chat with TV stars about the experience of being killed off on screen. Cyril Nri’s Lance was bludgeoned with a gold club in Cucumber, and he says “it was difficult to remain emotionally in the right place for four hours in closeup”. Jason
Many years ago, the task of reviewing Civilisation II nearly got Keith Stuart fired from a video game magazine because he did little else for a fortnight. Those who understand his plight will be thrilled and terrified that his review of Civilisation VII is a five star rave. (No written warning this time, as far as I know.) Archie
Zoe Williams has spoken to Coralie Fargeat, director of The Substance, about her shocking and gory take on the pursuit of bodily perfection. “I was trying to deconstruct, explode the idea of beauty,” Fargeat says. Jason
Sport
Football | Chelsea came from behind to beat West Ham 2-1, with a 74th minute own goal from Aaron Wan-Bissaka handing the hosts victory.
Football | Tottenham have completed the loan signing of the Bayern Munich forward Mathys Tel with an option to buy for £50m in the summer after going back in for one of the hottest properties of the winter transfer window. Meanwhile on deadline day, West Ham signed the Brighton striker Evan Ferguson on loan and Everton have signed attacking midfielder Carlos Alcaraz on loan from Flamengo with an option to buy in the summer.
Football | Jenni Hermoso has told a court that “one of the happiest moments” of her life was ruined when Luis Rubiales, the then president of the Spanish Football Federation, kissed her on the lips after Spain’s World Cup win in August 2023. Rubiales is accused of sexual assault and coercion over allegations he tried to pressure Hermoso into declaring that the kiss was consensual.
The front pages
“Starmer faces Labour revolt over backing for oilfield,” is the splash on the Guardian today, featuring a story about the internal backlash over the plan. “PM won’t back EU in trade war,” writes the Times, while the Metro says “What a time to be crawling back to the EU!” and the FT writes: “Markets rebound after Sheinbaum’s talk with Trump brings tariffs pause.”
“Rayner to set rules on Islam and free speech,” is the lead on the Telegraph on Tuesday, as the Metro looks at ‘jail-breaking spy for Iran’ Daniel Khalife with a headline quoting the judge who jailed him for 14 years: “Dangerous fool who put lives at risk.” “15-year-old boy knifed to death in school attack,” says the Express, as the Sun focuses on new photographs of Catherine, the Princess of Wales, with the headline: “Say trees Mummy!”
Today in Focus
‘A city of ghosts’: two Gaza residents return home
Since the beginning of the war hundreds of thousands of people in Gaza have had to flee their homes. Many were repeatedly displaced. Then, finally last month, with the announcement of the ceasefire between Israel and Hamas came the chance to return. A chance to see what has remained of their homes, neighbourhoods and communities.
Cartoon of the day | Rebecca Hendin
The Upside
A bit of good news to remind you that the world’s not all bad
Photographer Martin Divíšek visited the 27th annual Sedivackuv Long sled dog race, which takes place in the Orlicke mountain range near the Czech border with Poland.
In this photo essay published by the Guardian, he captures some of the more than 700 dogs, and their “musher” handlers, over the gruelling four-day trek. His photographs are a touching reminder of the earnest bond between man and dog – and they’re also really cute.
Bored at work?
And finally, the Guardian’s puzzles are here to keep you entertained throughout the day. Until tomorrow.
