Why is Trump imposing tariffs and which countries will be hit hardest? – in charts | Trump administration

The US president, Donald Trump, has put global leaders ill at ease with his threat of tariffs.

After announcing and then delaying tariffs on Canada and Mexico, hitting Chinese goods with an additional 10% tariff and also threatening the European Union, countries and markets are concerned about where the US president will go next.

Trump’s policies come at a time when the US operates a large negative trade balance with the rest of the world. This happens when a country buys or imports more from other countries than it sells or exports to them.

In 2024, the US operated a trade deficit in goods of more than $1.2tn (£970bn) with the rest of the world, but operated a surplus of nearly $300bn in services.

The charts below show why the Trump administration may have picked out certain countries to target with tariffs, and what the impact of any trade barriers could be.

The analysis looks mostly at trade in physical goods as opposed to services, which unlike merchandise trade are not subject to tariffs and border checks.

Which countries import the most goods to the US?

In 2024, the US received the most imports from Mexico, China and Canada. Each of these countries imported more than $400bn of goods into the US.

Mexico and Canada export a lot of vehicles to the US, as well as energy and oil. Machinery and electrical equipment also form a significant portion of Mexican exports to the US. Chinese exports include electronics, machinery and agricultural goods.

European and Asian allies – such as Germany, Japan, South Korea and Vietnam – are the next biggest exporters to the US, with the US importing more than $100bn of goods from each of these countries last year. The US imported $68bn of goods from the UK that year.

While the EU is treated as one large entity for the purposes of trade and tariffs, the data includes figures on each member state individually.

The collective value of exports since 2009 is $5.2tn for Canada, $5.3tn for Mexico and $7.2tn for China.

Trump is tackling large trade deficits

But trade works both ways. The US is the world’s largest importer of goods, but China is the biggest exporter.

Overall, when tallying the total value of imports versus exports, the US also has the world’s largest trade deficit, worth more than $1tn. Some countries export far more to the US than they import, and it is these nations Trump appears to be targeting most.

The countries that the US has the largest trade deficits with are China and Mexico, according to data from the US International Trade Administration.

Figures from 2024 show that the US’s largest trade deficit was with China, at $296bn. For Mexico it was $172bn. These countries were among the first to have the threat of tariffs hanging over them.

The US’s next largest deficits are with Vietnam – increasingly a gateway to the US for Chinese companies avoiding tariffs – followed by Ireland, Germany and Taiwan.

Which sectors could be most affected?

For Canada – one of the three countries first targeted by Trump’s tariffs in his second term – its most significant products being exported to the US are fossil fuels, cars and machinery – mostly jet turbines and piston engines. Cars and machinery also represent the largest product groups being transported for sale from the US to Canada.

While Mexico has a significant trade surplus with the US, the US still sends tens of billions of dollars’ worth of products in cars, machinery and electrical goods south of the border. This includes microchips, fibre cables and computer equipment. On the whole Mexico also exports the same products to its northern neighbour, although its main export is cars and trucks.

Mexico and Canada have enjoyed largely free trade with the US since 1994 when the North American Free Trade Agreement (Nafta) came into effect. It was replaced in 2020 by the United States-Mexico-Canada Agreement (USMCA).

In both of these cases, the US exports a significant amount of oil to its neighbours. Trump’s initial announcement seemed to acknowledge this when he targeted energy resources by a smaller tariff rate of 10%.

Trump has threatened, but not yet announced, tariffs on the European Union. Data shows that pharmaceutical products such as vaccines, machinery and cars account for nearly half of the EU’s exports to the US. Flowing the other way, from the US to the EU, is oil, pharmaceutical items and machinery.

Finally, there is China – which has implemented retaliatory tariffs against the US – half of whose exports go to the US in electrical devices such as computers, phones and batteries as well as toys and games. US exports to China include electrical items such as microchips, oil and soya beans.

Trade between the US and China has been decreasing – in 2018, 21% of US imports came from China, and by 2023 this had fallen to 14%.

Which countries are the most exposed?

When looking at what proportion of each countries’ trade is accounted for by the US, we can get a sense of how exposed each country’s trading economy is.

The vast majority of trade in goods for both Canada and Mexico goes to the US – with 80% of Mexican and 78% of Canadian exported goods going to the US, according to data from Comtrade.

The EU, China and the UK are less directly exposed – with 19%, 15% and 14% of their exported products going to the US. Within the EU, Germany dominates the value of the bloc’s exports, at more than $160bn in 2024, but that only accounts for 10% of its global total. Ireland, which exports about $100bn to the US, has the highest, with more than a quarter of its exports destined for the US market.

However, even if the proportion of their direct trade with the US is lower, experts warn that the interconnectedness of world trade would still mean countries would be in the firing line. That’s because modern supply chains stretch across multiple nations, with parts often crossing borders several times to make a finished product. For example, if Germany was hit by tariffs, but Britain was not, a UK company could still be hit if it supplied parts used in a German product destined for the US market.

What does this mean for the UK?

At the moment the UK has avoided a specific threat of tariffs hanging over it. Some of this could be down to the fact that Britain has a relatively balanced trade relationship with the US compared with other nations.

One reason Britain’s exports to the US are outside Trump’s line of fire is because US figures suggest it had a physical goods trade surplus with Britain of about $10bn (around £8bn) in 2023. UK figures, by contrast, suggest it was actually the UK that had a small goods surplus of £2.4bn that year – with a collective goods and services surplus of £71.4bn.

The ONS blames this difference largely on two reasons: territorial definitions, with the US data including crown dependencies, unlike the UK; and the methodologies used to estimate services trade.

Bloomberg Economics estimates that if Trump imposed 20% tariffs on the UK, growth this year could come in at 0.4% rather than 1.1%.

Services account for the majority of trade between the UK and US. But if goods were targeted in any future tariff, the UK’s most exported products to the US are pharmaceutical products, cars, mechanical power generators, scientific instruments and aircraft products. The US’s biggest exports to the UK were oil, mechanical power generators, pharmaceutical products and aircraft products.

One complicating factor for the Labour government is that the closer the Labour government aligns the British economy with the EU – as it promised to do in July’s election – the less room it has for manoeuvre to accommodate US demands on trade.

Experts say Washington is likely to demand access to the UK market for US agrifood products – including hormone-fed beef and chlorinated chicken. This would be both politically challenging for Labour, but also take the UK out of line with EU food safety standards, making trade harder. Experts therefore warn that Keir Starmer would be forced to choose between Brussels and Washington.

Sources and methodology

Data for most of the visuals in this piece were sourced from the US International Trade Administration. Any data not sourced from them will be stated as such. Product categorisation used is HS4: category sections like electrical and machinery include a broad range of products and only the top items within them are specified. The full list of products in each category is available here. Data on UK imports and exports will differ from ONS data as the categories and territorial definitions used vary widely.