Caitlin Wilson
US live editor

Image source, Reuters

LinkUS President-elect Donald Trump campaigned on the proposal that he would impose tariffs on certain goods imported to the United States from abroad - and now he is outlining how he will follow through on those plans.

Trump has announced that, once he takes office in January, he will introduce 25% tariffs on goods entering the US from Canada and Mexico, and will also increase existing tariffs on China by 10%, citing frustration over drugs and illegal migrants crossing the US border.

Tariffs are a form of domestic tax which are placed on goods as they enter the country, depending on how much the product costs.

But who ultimately ends up paying the price for tariffs?

Economic studies of the impact of tariffs, , externalwhich Trump imposed in his first term of office between 2017 and 2020, suggest most of the economic burden was ultimately borne by US consumers.

Mexico, Canada and China have all expressed their concern over Trump's plans.

We will have to wait and see what the ultimate outcome from this announcement is for the US and international economy, as Trump does not take office until January. For now, we are closing our live coverage. Thank you for joining us.

Brandon Drenon
Reporting from Washington DC

Donald Trump's friendly disposition toward tariffs is not new.

The president-elect raised tariffs considerably on imports from China during his first administration, and on the campaign trail this year he often gloated about the prospect of raising tariffs to reduce America's trade deficit and to protect US jobs.

But using tariffs to threaten other countries into complying with US demands - in this case, curbing the flow of illegal immigration and drugs - is new, and its effectiveness unknown.

"Many of us economists have been wondering, does he see increasing these tariffs as giving him negotiating leverage?" Robert Koopman, an economics professor at American University asks. "If so, on what?"

Koopman questions how much heightened economic stress on Mexico from tariffs can work to reduce illegal migration, a situation he says is likely to persist "as long as the US is viewed as a stronger economy and a safer place to live".

But, he says, "just because we haven't seen [tariffs used this way] doesn't mean it may not work".

"On the other hand, there isn't a lot of evidence that it would work."

Inflation likely to rise above US Federal Reserve target after tariffs- Deutsche Bankpublished at 20:32 Greenwich Mean Time 26 November

20:32 GMT 26 November

Jonathan Josephs
BBC business reporter

Another forecast from Deutsche Bank warns that these tariffs are likely to push up US inflation, but there is also caution that it's still two months until Donald Trump takes office and potentially implements his plans.

The bank says that the personal consumption expenditure (PCE) measure of inflation is likely to go above 3% next year. It's currently 2.1%.

It's an important number because it's the one that the US central bank, the Federal Reserve, uses to set the cost of borrowing - their target is 2%.

Normally when inflation is above target, central banks look to bring it down by increasing the interest rates that set the cost of borrowing.

If rates go up, it will cost the US government heavily, because they will have to pay more interest on the soaring US national debt.

That debt is now at more than $36tn, compared to just over $23tn at the end of Donald Trump’s first term as president, after heavy Covid-era spending.

However, some of the president-elect's economic allies aren't too concerned, and point out that other Trump policies, such as cutting the cost of oil by increasing supply, will offset the inflationary impact of tariffs.

Brandon Drenon
US reporter

Raising tariffs substantially on Mexico and Canada could prove much more difficult - and potentially more damaging - than raising tariffs on China, according to one expert.

"We are much more integrated in terms of trade with those two countries (Mexico and Canada)," American University economics professor Robert Koopman tells me.

"There are lots of goods for which we rely on imports of parts and components or final goods from Mexico," he says. And, he adds, there are lots of things the US exports to Mexico that they could in turn raise tariffs on too.

"There are big, important sectors in the United States that would be very unhappy with these tariffs," Koopman says.

Trump is "going to be hearing in the next few days from automobile manufacturers, from medical instrument producers, housing industry, big truck manufacturers, big semi rigs (operators). He's going to be hearing from these firms that this is going to be very disruptive to their operations."

Image source, Getty Images

Scott Bessent - Donald Trump's nominee to lead the US Treasury Department - will likely be one of several officials responsible the proposed 25% tariffs on goods imported from Canada, Mexico, and China.

But what's his stance on tariffs?

Writing for Fox News last week, external, the Wall Street financier said tariffs are a "revenue-raising tool and a way of protecting strategically important industries in the US".

Trump has added a third use to them as a "negotiating tool with our trading partners", he said.

"The truth is that other countries have taken advantage of the US's openness for far too long, because we allowed them to," he wrote. "Tariffs are a means to finally stand up for Americans."

The 62-year-old added that tariffs can be "useful" in "achieving the president's foreign policy objectives", such as "securing cooperation on ending illegal migration and interdicting fentanyl trafficking".

Connecticut Senator Richard Blumenthal, a Democrat, told CNN this morning that Donald Trump is headed towards a "real horror show" if promises he made during the election can't be kept.

Blumenthal was asked about Trump's newly promised tariff policy and said he takes the Republican president-elect very seriously, saying Trump means what he says.

But Blumenthal cautioned that consumers aren't going to be happy when they see the practical consequences of higher prices of goods that many experts warn tariffs are likely to cause.

Image source, Reuters

Canada’s deputy PM says that a call between Donald Trump and Justin Trudeau marked an opportunity to highlight the fact that the economic relationship between Canada and the US is “mutually beneficial”.

The president-elect’s team have declined to confirm that a call took place between Trump and Trudeau, but Chrystia Freeland told reporters at a press conference that Canada and the US both rely on each other.

"Canada is the largest market for the US in the world," she emphasises. "The things we sell to the US are the things they really need."

Trump has warned that Canada will face tariffs of 25% for goods imported into the US, but Freeland says that this is a situation her country has navigated with Trump successfully before.

The deputy PM raises the example of historic tariffs imposed on steel and aluminium, to which she says Canada reacted by raising “dollar for dollar” tariffs of their own on US imports.

"At the end of the day, the economic relationship between our two countries is balanced and mutually beneficial," she explains. "That is what drove us to a positive outcome."

Trump's first term tariffs did not close the US trade deficitpublished at 19:55 Greenwich Mean Time 26 November

19:55 GMT 26 November

By Ben Chu, BBC Verify

Trump has criticised America's trade deficit, which is the difference between the value of all the things the country imports and the value of its exports in a given year.

"Trade deficits hurt the economy very badly," he has said, external.

In 2016, just before Trump took office, the total goods and services deficit, external was $480bn, around 2.5% of US GDP. By 2020, it had grown to $653bn, around 3% of GDP, despite the tariffs his administration imposed.

Part of the explanation, according to economists,, external is that Trump's tariffs increased the international relative value of the US dollar (by automatically reducing demand for foreign currencies in international trade) and that this made the products of US exporters less competitive globally.

Another factor behind this failure to close the trade deficit is the fact that tariffs, in a globalised economy with multinational companies, can sometimes be bypassed.

• Read more about the potential impact of Trump's tariff plans here.

The US and China have a long history of going tit-for-tat on tariffs. In 2018, the Trump administration started to ramp up trade measures against Beijing.

By 2020, the US had imposed tariffs on more than $360bn (£268bn) of Chinese goods. China hit back by placing import levies on about $110bn of American goods.

Most of those measures remained in place more than two years after Joe Biden became president at the start of 2021.

In fact, the US president imposed further sanctions on Chinese companies including Huwaei, as well as restricting China’s access to artificial intelligence technology over the course of his term.

The US has been China's biggest export market for over two decades, but during his election campaign, Donald Trump had promised that he would impose tariffs in excess of 60% on Chinese imports, which he said had "taken advantage" of the US.

Earlier we reported that a Canadian government official had told us PM Justin Trudeau had a call with Trump last night about the tariffs - and that it was a "good conversation".

Trump's presidential transition team has declined to comment on whether the call took place.

In a statement, Trump's communications director Steven Cheung says: "We do not comment on private calls between President Trump and other world leaders", according to CBS, the BBC's US news partner.

"Leaders have begun the process of developing stronger relationships with the 45th and 47th President because he represents global peace and stability," Cheung added.

Image source, Getty Images

During his election run, Donald Trump campaigned heavily in Michigan, where he criticised electric cars and pledged support for the traditional gas-led US automotive industry.

But, the president-elect's decisions to impose a 25% tariff on goods from Mexico could now backfire on America's top car manufacturers.

According to Reuters, shares in the three largest US automakers, Stellantis, General Motors, and Ford, dropped sharply after the news of Trump’s tariff plans.

That's because many of the largest American manufacturers build their cars in Mexico - a quarter of Stellantis's vehicles sold in North America are made in the neighbouring country, Reuters says.

As a result, analyst Daniel Roeska says: "this would spell disaster for the US auto industry and Detroit Three manufacturers, all of whom import significant numbers of vehicles from Canada and Mexico".

The Canadian dollar, the Loonie, has plunged in value since Trump vowed to impose tariffs on Canadian imports come January.

The Canadian dollar dipped below 71 US cents.

It marks the lowest level the Loonie has fallen to since May 2020, when Trump threatened to impose tariffs on Canadian goods during his first stint as US president.

In practical terms, a tariff is a domestic tax levied on goods as they enter the country, proportional to the value of the import.

So a car imported to the US with a value of $50,000 (£38,000) subject to a 10% tariff would face a $5,000 charge.

The charge is physically paid by the domestic company that imports the goods, not the foreign company that exports them.

So, in that sense, it is a straightforward tax paid by domestic US firms to the US government.

Economic studies of the impact of tariffs, external that Trump imposed in his first term of office between 2017 and 2020 suggest most of the economic burden was ultimately borne by US consumers.

Michelle Fleury
New York business correspondent

Goldman Sachs has warned that President-elect Donald Trump’s proposed tariffs could push US inflation higher by nearly 1%.

In a note, Goldman’s chief economist Jan Hatzius explains that the tariff hikes could increase core PCE prices by 0.9%.

The core PCE, which excludes food and energy costs, is the Federal Reserve’s preferred inflation gauge. Hatzius added that based on the bank’s analysis, each 1 percentage point rise in tariffs generally leads to a 0.1% uptick in core PCE inflation.

With tariffs targeting major trade partners, including China, Mexico, and Canada - who together account for 43% of US imports - Goldman expects the proposal could generate close to $300 billion in revenue annually.

Hatzius also noted that Mexico and Canada are less likely to face broad tariffs compared to China.

Who will bear the cost of tariffs?published at 18:19 Greenwich Mean Time 26 November

18:19 GMT 26 November

By Ben Chu, BBC Verify

The question of where the final "economic" burden of tariffs falls, as opposed to the upfront bill, is complicated.

If the US importing firm passes on the cost of the tariff to the person buying the product in the US in the form of higher retail prices, it would be the US consumer that bears the economic burden.

If the US importing firm absorbs the cost of the tariff itself and doesn't pass it on, then that firm is said to bear the economic burden in the form of lower profits than it would otherwise have enjoyed.

Alternatively, it is possible that foreign exporters might have to lower their wholesale prices by the value of the tariff in order to retain their US customers.

In that scenario, the exporting firm would bear the economic burden of the tariff in the form of lower profits.

All three scenarios are theoretically possible.

But economic studies of the impact of the new tariffs, external that Trump imposed in his first term of office between 2017 and 2020 suggest that most of the economic burden was ultimately borne by US consumers.

The non-partisan Peterson Institute for International Economics estimated, external in May – before the latest announcement – that Trump's proposed tariffs would lower the incomes of Americans, with the impact ranging from around 4% for the poorest fifth to around 2% for the wealthiest fifth.

A typical household in the middle of the US income distribution, the think tank estimates, would lose around $1,700 each year.

Image source, Reuters

Donald Trump's proposed tariffs are "an unjustified threat" to Canada, a rival to Canada's Prime Minister Justin Trudeau says.

Speaking at a press conference, Pierre Poilievre - Canada's Conservative leader - says that the tariffs will hit an "already weak and shrinking economy" hard.

Poilievre also calls on Trudeau to allocate funds towards "rebuilding our military" and "reinforcing our military security over North America".

Shortly before leaving the press conference, Poilievre says it is a "nice idea" to think that Canada can avoid relying on the US for trade, but says he's "interested in reality".

And, pushed on whether he would be prepared to retaliate to tariffs and sanctions, Trudeau's rival says: "If necessary."

Let's catch up on what's been happening today with the tariffs Donald Trump says he will impose on goods coming into the United States once he takes office in January.

• President-elect Donald Trump has said he will impose 25% tariffs on all goods entering the US from Canada and Mexico on his first day in office, saying they will remain in place until the two countries "solve" the issue of illegal migrants and drugs crossing their borders into the United States
• He also said he will increase existing tariffs on China by 10%, again citing the need to prevent drugs, particularly fentanyl, from entering the US
• China's embassy in Washington said it believes economic and trade cooperation with the US is "mutually beneficial" and “no-one will win a trade war or a tariff war”
• Meanwhile Mexican President Claudia Sheinbaum said neither threats nor tariffs would solve the issues raised, and warned of retaliatory tariffs on US imports if Trump goes ahead
• Canada's Prime Minister Justin Trudeau spoke to Trump on the phone shortly after the president-elect announced his plans – Trudeau has since said he is prepared to work with the US in "constructive way"
• There has been some speculation that Trump's tariff threats may be a negotiating tactic, and markets appear unsure

Will Grant
Reporting from Mexico City

In her daily press briefing, President Claudia Sheinbaum read out a letter she plans to send to Donald Trump in response to his comments about possible tariffs on Mexican products when he takes office.

As Mexicans would expect of her, she was robust in her reaction to what her government sees as provocative rhetoric.

Neither threats nor tariffs would fix the issue of undocumented immigration, she said, and warned the US president-elect that if any were imposed, she would retaliate with some of her own.

A cross-border trade war isn't a situation anyone especially wants in North America but there is a sense of deja vu among the business community in Mexico.

Not even are Donald Trump's feet under the desk in the Oval Office and already he's threatening his neighbours with sanctions. For many here, that has echoes of the kind of relationship they remember from four years ago.

Yet there's also a feeling that Mexicans must separate Trump's bark from his bite. Mexicans consider him a leader who is prone to making such statements before cooler heads prevail.

Furthermore, Mexican government agencies might well ask what more they can do on the issue of immigration.

They have cracked down hard on migrants heading north following pressure from the Biden administration. And, campaign bluster aside, Donald Trump is in fact set to inherit a situation in which fewer undocumented migrants are being apprehended at the US-Mexico border than at any other time over the past four years.

How much fentanyl comes into the US and from where?published at 17:31 Greenwich Mean Time 26 November

17:31 GMT 26 November

By Jake Horton, BBC Verify

Donald Trump says one of the reasons he’s introducing new tariffs on China, Mexico and Canada is to force them to crack down on the flow of drugs into the US.

He highlighted the synthetic drug fentanyl and pointed the finger of blame at China in particular.

It is impossible to know exactly how much fentanyl has been smuggled across US borders but we do have figures for how much has been seized - and these have increased.

In the 2024 fiscal year (October 2023-September 2024), 21,900 lbs (9,934 kg) of fentanyl was seized compared with 14,700 lbs (6,668 kg) the year before - according to figures published by US Customs and Border Patrol (CBP). , external

The vast majority of seizures came at the US-Mexico border.

We don’t know exactly where the fentanyl is originating from as the nature of the drug trade makes it hard to track - but various studies suggest that China and Mexico are the primary source for fentanyl trafficked into the US., external

Image source, Reuters

Global economist Keyu Jin says she thinks it's "very likely" Donald Trump will not go through with his "very high numbers" on tariffs.

Speaking from Beijing, she says China has been "preparing" for the possibility of a Trump presidency imposing high tariffs for "quite a few years".

"It has done that mostly by relying on its own economy and also grasping the opportunity to strengthen ties with other nations," she says.

But Jin tells the BBC World Service's Newshour programme that the proposed tariffs would have a "negative impact on the Chinese economy because America is a large trading partner for the country.