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Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer
by olejorgenb 2y ago
Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff?
Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?
- lysace 2y agoThere is no logic to it. It's just the US going insane and Americans nodding along. https://taxpolicy.org.uk/2025/04/02/no-vat-isnt-a-tariff-but-the-us-would-benefit-from-adopting-it/ https://taxpolicy.org.uk/2025/04/02/no-vat-isnt-a-tariff-but... https://iccwbo.org/news-publications/news/are-value-added-taxes-a-barrier-to-trade/ https://iccwbo.org/news-publications/news/are-value-added-ta... https://www.cnbc.com/2025/03/31/as-trump-reciprocal-tariffs-near-economists-say-vats-arent-trade-barrier.html https://www.cnbc.com/2025/03/31/as-trump-reciprocal-tariffs-... etc, etc. The only reasonable reply as a consumer and/or cloud-service purchaser: Economic wide-scale boycott of the US.
- JumpCrisscross 2y ago[flagged]
- tempestn 2y agoHalf the voting population voted for Trump. Twice. You can't really paint it as a fringe minority.
- JumpCrisscross 2y agoOh, I’m not letting them off the hook. I’m just saying that these policies are broadly unpopular outside a specific slice of the Republican Party. That’s relevant to lawmakers wondering about their job security in 2026.
- roenxi 2y agoThat is missing the big picture. The US has a debt & deficit problem. There is no consensus policy on how to deal with it [0] and every slice of the population wants to handle it differently (generally by picking a different slice of the population to bear the burden). The federal government tried printing money and that was a big contributor to the Biden administration getting voted out. Somewhat unfairly, but oh well. It wasn't working very well and the political appetite isn't there right now to be associated with monetisation. Reducing the size and scope of government is being debated, but realistically the appetite doesn't seem to be there either. Now the administration are going to try taxing foreigners. It probably won't go well either. This is the US political process seeing a major problem and cycling through options to check for alternatives other than raising taxes on a voting constituency. None of the revenue raising ideas have widespread support - they all harm the economy and they're all going to have specific subsets of the population that support them. Pointing out a particular subset isn't particularly useful. [0] I suspect there is a consensus on the debt part - don't pay it - but that still leaves the deficit to sort out.
- JumpCrisscross 2y ago> This is the US political process seeing a major problem and cycling through options to check for alternatives other than raising taxes on a voting constituency It’s the political process using a known problem to distract people. There is no intent to not take any new revenue or budget savings and convert it into more spending and/or tax cuts. We don’t have anyone in the government serious about deficit reduction. That’s clear in the policy proposals being put forward.
- deleted 2y ago[deleted]
- brabel 2y agoI am not from the US but calling out a specific race, besides a specific gender, seems really messed up. You know, just swapping the races you don't like doesn't make you not a racist. Can't you guys get past the "race" issue, please?
- JumpCrisscross 2y ago> calling out a specific race, besides a specific gender, seems really messed up One of the bright notes of the last few elections has been the racial depolarisation of politics in America. That said, we’re not in the endgame. You can still predict partisan (and subpartisan) affiliation by race plus one or two factors. Which is why we poll on that basis. In this case, there is one demographic that provides MAGA economic policies with oxygen. It falls along a specific race, gender and education axis—I don’t think it’s inappropriate to comment on that. > just swapping the races you don't like doesn't make you not a racist Sure. I don’t see how pointing out what a specific demographic did (qualified with a partisan lens) is derogatory.
- eterm 2y agoThey're supported by every person who isn't taking action to stop it.
- DangitBobby 2y agoShould we be going to the capital with guns or...?
- blacklion 2y ago> Should we be going to the capital with guns or...? I always thought, that it is second amendment for, not for shooting is schools and malls.
- 4ggr0 2y ago[dead]
- tempestn 2y agoNo, but at this point there should be mass protests. Deporting innocent people to El Salvadoran prison for life without due process? If people aren't (at least figuratively) up in arms about that, then what?
- JumpCrisscross 2y ago> there should be mass protests Protests in blue cities will do nothing right now. We need to field candidates in primaries against complacent democrats. And we need protests in red districts (and apparently at Tesla dealerships, given that’s setting Musk off).
- zitsarethecure 2y agoMy elderly next door neighbor told me she voted for Trump because she thought that's what her (now passed away) husband would have wanted.
- simne 2y agoUS formally don't have VAT, when most other developed countries have. As I know, US states few decades spent on talks about implement VAT, but have not achieved agreement yet. For equivalent, most US states have trade tax, could be returned with set of rules. So, on some abstract level it could be considered as far equivalent of VAT, which is also could be returned with set of rules.
- kergonath 2y ago> Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? There is no logic. VAT isn’t tariffs and is not discriminatory. In the same way as trade imbalance is not theft. It’s just Trump trying to find reasons to complain and present the US as a victim.
- seanmcdirmid 2y agoThe only logic is that since the USA doesn’t have a VAT system, there is no way to do export VAT rebates. > Export VAT rebates mean to refund the VAT paid in various domestic production stages to exporters. The purpose is to ensure that the prices of exported products are free of taxes in order to maintain a level playing field for international markets. So that can’t exist at all for American exporters, since the USA doesn’t use VAT, their goods are taxed at a higher rate (as far as the exporters are concerned). It’s confusing, but Trump could have just asked for negotiations to get rid of this distortion.
- rpep 2y agoOther thing is that when you’re VAT registered, as a buyer of parts you reclaim VAT on things you purchase as inputs. So the tax on the final product is what matters. With US sales taxes you accrue tax all the way up the chain.
- Duwensatzaj 2y agoWhat? Sales tax exemption is a thing when buying items for sale or materials for items for sale.
- physicsguy 2y agoIn many states in the US, if you go and buy materials, as a business, you pay a sales tax. There are exemptions and partial rebates, but there's nothing across all industries, and it varies by state. So if you were a farmer you might find you were exempt on fertilizer and tractors but not on a pickup truck. That's different to a VAT, because there, as long as you're a registered business for VAT purposes, all purchases you make are exempt from VAT - either you don't pay it when you purchase and are invoiced by a business, or you can claim it back if you keep receipts. Companies have to register for VAT when revenue hits a certain amount; here in the UK it's £85k for e.g.
- bakuninsbart 2y agoA tariff is a tax specifically on foreign goods. It is an artificial barrier to trade used to make domestic products more competitive. VAT is a tax applied to all products equally, so it isn't a trade barrier. You might be able to construe a convoluted argument that it is easier for domestic companies to work through domestic regulation, but that's pretty weak. The US seems to have simply taken the value of the trade deficit with a country, divided it by total imports from that country, and used that as the tariff percentage. So in their logic, wherever there is a trade imbalance, this must be explained by barriers to trade. So in a sense this is also a repudiation of the core hypothesis of global free trade as an ideology: That, if countries trade freely with one another, they can specialise on certain production and a virtuous cycle makes everyone richer. In Trump's ideology, trade is a zero sum game, and having a trade deficit means that you are losing.
- arlort 2y agoOthers pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods
- csmpltn 2y agoVAT is effectively a tariff though, because it disincentivizes import/trade with the US (and other foreign countries). Since the US has no VAT, it's leading to unfair competition.
- sam_lowry_ 2y agoUS has sales taxes. If anything, VAT incentivizes sustainable economy by making production more expensive than reuse.
- arlort 2y agoVAT applies equally to domestic and foreign companies. It's a tax. Tariffs and barriers to trade are measures meant to incentivize production in the country imposing them. That's what free trade is meant to get rid of, that's why Trump is so keen on tariffs and likes them If a company moved a production line to within the EU from outside because of VAT they'd still have to pay the same exact amount of VAT as they did before. It's just not an incentive in that sense
- olejorgenb 2y agoRepeating this does not lead to understanding. Give a concrete example of how the rules applies which show your point...
- davejohnclark 2y agoGood write up here https://www.economicforces.xyz/p/stop-saying-a-value-added-tax-is https://www.economicforces.xyz/p/stop-saying-a-value-added-t... about how VAT doesn't alter the levelness of the playing field re imports and exports
- rich_sasha 2y agoWell, they are saying, EU market is harder to operate in (because everyone pays VAT) than the US market (no VAT, also lower regulatory barriers it seems), and also EU firms have a "home advantage" benefit, for example the regulation is written for their benefit. So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit. Additionally, US car tariff used to be 2.5%, whereas EUs is 10%. The imbalance is short in justification, though across the board, EU and US charge each other similar tariff amounts altogether, so there are other areas where the US charges more. Whether that justifies broad brush enormous tariffs in everything, and whether US does the same in other industries (defence for example) is an exercise I leave for the trader.
- klelatti 2y ago> So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit. It's completely without merit. Do you really think US regulation isn't written for the benefit of US companies? It is!
- rich_sasha 2y agoFrom my post: > [...] US does the same in other industries As it happens, automotive regulation in Europe is far stricter than the US ones (emissions and pedestrian safety come to mind).
- klelatti 2y agoNot the point I was making. In any event US cars don’t sell in Europe for a range of reasons including size and fuel consumption. Those stricter rules apply to everyone and I don’t think it’s beyond US manufacturers to meet those rules for cars sold in European markets. If you’re saying that Europe should loosen its safety rules just so the US can export more cars then the answer will certainly be no.
- csmpltn 2y agoEuropean VAT makes it difficult for American companies to compete in Europe. US has no VAT, making it easier for European companies to compete in America... Combined with the fact that the US is the de-facto largest benefactor of NATO, Ukraine, UN, etc... then the US is getting shafted by the EU and Trump is correct in seeking ways to mitigate that. Applying this economical pressure on the EU is a valid strategy, IMHO.
- olejorgenb 2y agoCan you explain how it make it difficult? Ie. Give an example of how the system is an disadvantage for en American exporter or an advantage to an European exporter
- czzr 2y agoNo, you are simply incorrect, a VAT system does not make it harder for US companies to compete. It's explained well here: https://www.economicforces.xyz/p/stop-saying-a-value-added-tax-is https://www.economicforces.xyz/p/stop-saying-a-value-added-t... For those who don't follow the link, here's an extract from the article explaining the core situation: Imagine a car that costs $30,000 to produce before tax. Now compare four scenarios: 1) BMW sells the car in Germany (domestic sale): Germany’s VAT (let’s say 20% for simplicity) is added on the final sale. The German consumer pays 20% VAT, i.e., an extra $6,000, for a total price of $36,000. BMW forwards that $6,000 to the German government as VAT. 2) BMW exports the car to the U.S.: Since the car is exported, BMW does not charge German VAT. Any VAT BMW paid on parts or inputs is refunded by the German tax authority. The U.S. buyer pays the $30,000 price, and since the U.S. has no federal VAT, there’s no equivalent federal tax on that sale. (A state sales tax might apply at the point of sale, but we’ll come back to that.) The key point: the German government collects no VAT on an item consumed in the U.S.. This makes complete sense because that car’s being enjoyed by an American buyer, not a German resident. 3) GM sells the car in the U.S. (domestic sale): The U.S. has no VAT, so the American consumer pays $30,000 (ignoring any state sales tax). No federal consumption tax is collected. (In states with a sales tax, the consumer might pay, say, 7% extra to the state government, but again, the federal treatment is no tax.) 4) GM exports the car to Germany: When the car arrives in Germany, it faces the same 20% VAT as any car sold in Germany. So a German customer buying the American-made car pays $30,000 + $6,000 VAT = $36,000. That $6,000 goes to the German government. From GM’s perspective, it doesn’t owe U.S. tax on that export sale (since the U.S. doesn’t tax exports of goods), but its product will bear German VAT when consumed in Germany. What outcome do we have here? In Germany, both the BMW and the GM car cost the same $36,000 after tax, and the German government collects VAT on both. In the U.S., both cars cost $30,000 before any state sales taxes, and the U.S. government collects no federal consumption tax on either. Each country taxes consumption within its borders—no matter where the product came from—and does not tax consumption outside its borders. This is precisely the goal of destination-based taxation: neutrality. Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a “ball and chain” when they go compete in foreign markets.
- olejorgenb 2y agoFor context - here is one of Trump's posts which mention VAT: https://truthsocial.com/@realDonaldTrump/posts/114009175266247925 https://truthsocial.com/@realDonaldTrump/posts/1140091752662... No details provided.