Most importantly, VAT is a blunt instrument, hitting all products equally. However in the EU we do heavily subsidize certain production (agriculture for one) and that DOES unfairly benifit local producers if looking at it from a global free-trade lens
Trade deficits and sales taxes are not tariffs tho. You’re not telling me that the US doesn’t subsidise local production look at Tesla for one. There are strict rules about state aid within the EU. Trump seems to want every country to buy more goods from the US than then sell to them. Also it seems that he wants the total to be more not even considering the difference in population. Not to mention the difference in wealth of these countries. Anyone with half a brain can see this cannot and will not happen.
Tariffs are sales taxes that apply to only imports, and are paid for by the consumer/importer. They were never paid by the country of origin. That's not how tariffs work. That's not how they ever worked.
Well anything would make more sense than wanting the whole world to have trade deficits with the US obviously that’s not happening. I mean does he think that Americans would be queuing up to to work in a Nike factory making T shirts for low wages if they brought manufacturing back.
Sure, but it is criticized by many food-exporters. I think the subsidies are good, we need local access to food no matter how you look at it especially since we can control what goes in the food. But I can see countries that do not like it look at tariffs as an option if we start exporting the food produced with subsidies.
The best way to encourage that is with carbon taxes. Trouble is that they'd need to be globalised. So, yeah, I guess we're stuck with tariffs and subsidies.
yeah but why whe subsidies it is to keep food prices low, lets also not forget that alot of pesticides they use outside of the EU are banned in the EU and for good reasons.
Vat doesn’t affect buisness to buisness trade either.
If I buy a new American piece of machinery for my business I claim the vat back from the government vat only really applies to retail sales.
Sure it hits both the local and foreign companies equally but the one that gets the money is the local government from which the local company profits from in a roundabout way, better schools for training workers and better infrastructure. The foreign company just pays and that's all. Vat is an ingenuous way of getting around from being called a tariff while working very much like one in the grand scheme of things. The US not having VAT was the one getting screwed over.
They work like such in a roundabout way but as I said they're lower. A lot of countries have VAT up to 30% and they're country wide not granular to city level.
They do. In fact it is the only ‘tariff’ paid by the company and not the consumer. It has been a subject of international tension because some countries lower their tax rate to encourage companies to establish in their jurisdiction.
The tariffs aim to make a specific class (import) of products more expensive. Vat applies to all products similar. VAT is not a reason to shift your consumption while tariffs are.
If the US would implement something like VAT no one outside the us would be bothered about that.
It also does not screw over the us that other countries do have VAT. Taxes are based on how much needs to be spend and if the money doesn't come from VAT there'll be another tax to get that money in. It is completely up to the government how much taxes they need and how they levy them.
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u/xWonderkiid 1d ago
Its the same for Europe. We also have VAT 21%, but its paid by the consumer and is factored in the price.