- Trump wants to impose reciprocal tariffs on countries that impose tariffs on American goods and services.
- He sees VATs as a model for this kind of reciprocity.
- VATs are similar to sales taxes but are levied at each stage of production.
- The US has rejected the use of a VAT due to practical and ideological reasons.
- The US government is concerned about the impact on state and local sales taxes.
- VATs are considered regressive because they disproportionately affect lower-income people.
- Trump sees a tariff-like quality to the VAT because American products entering Europe must pay tax on their entire value-added.
- Europeans argue that Americans face no special barrier or cost and that everyone selling in Europe faces the tax.
- VAT structures give exports a kind of subsidy by exempting them from the tax.
- European sales in America enjoy a cost reduction, whereas American sales in Europe pay the VAT.
Source: nationalinterest.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
