2 ms·

When I import Chinese goods to Europe as a consumer, I have to pay a 25% VAT, which functions as a tariff. It is officially a tariff as far as the government is

When I import Chinese goods to Europe as a consumer, I have to pay a 25% VAT, which functions as a tariff. It is officially a tariff as far as the government is concerned, as it is collected by customs and not by internal revenue. That is of course paired by the fact that domestic products also have the same VAT to be paid by consumers, but domestic producers are reimbursed their VAT expenses to varying degrees depending on their business model, while there is no such function for foreign imports. All in all the VAT functions as a tariff as far as the exporter is concerned, in my understanding. > My point remains that US exerting import pressure on China is benefitting the rest of the world's buying power with China, at its expense. I agree with that, and can't for my life understand why foreign nationals rage so incessantly against the US tariffs. The expected outcome is that those consumers get to enjoy cheaper imports from China and from each others, as companies need to find new export markets. Or even cheaper domestic goods as domestic companies have to unload produce which isn't getting exported.

tgtweak 10mo ago
VAT is a sales tax not a duty/tariff - this is due by you as a consumer not the importer were a company to purchase it for resale. If you bought the same goods from a local seller you'd have the same VAT. EU has some exceptions on goods from the EU (in the form of IOSS/de minimis) but by and large the VAT operates like a sales tax which many US states also have (as do Canadian Provinces and AU residents). For sake of comparison, they are not usually conflated with import/tariff/duties.
maxglute 10mo ago
>expected outcome is that those consumers get to enjoy cheaper imports from China That's eco101 expectation, but reality after initial tariff chaos settles is cat-mouse of circumvention - PRC producers would price discriminately, i.e. sell to RoW slightly higher to make up for less sales in US / cover transhipment / diversion costs, arbitrage different tariff rates etc. PRC producers that still sells to US would also simply value engineer / despec more (lower quality), make US SKUs with stripped functionality etc to recoup on $ per value basis, and other shenanigans like value shifting - selling at "lower" cost but recoup via other bundled fees, i.e. buyers buy widgets low, but also have to buy "service" packages in arbitrage jurisdictions so PRC producers still ends up netting same. All these strategies are happening btw. The main issue is PRC producer advantage is so large and the tariff execution so leaky that they can still underprice and get products to US at profit to stunt US reindustrialization. Meanwhile PRC industrial index for manufacturing is increasing while producer index dropping because they have access to cheap renewables / discounted sanctioned fossils, so their input costs dropping vs RoW, allowing them to make more, by selling cheaper, which extends gap of how much tariff shenanigans/engineering they do to mitigate the goal of US tariffs in the first place. Hence PRC exporting record #s and US SME manufacturing index on 3rd quarter of contraction from tariff drama. Meanwhile, much of RoW without PRC god tier industrial chains, simply left with eating straight shit on US tariffs vs PRC who has much more tools to circumvent. It's like how regulations favor big incumbents with most headroom/resources to exploit loopholes. TLDR supply chain manipulation by the worlds largest supply chain skews expected market equilibrium.

tgtweak 10mo ago

VAT is a sales tax not a duty/tariff - this is due by you as a consumer not the importer were a company to purchase it for resale. If you bought the same goods from a local seller you'd have the same VAT. EU has some exceptions on goods from the EU (in the form of IOSS/de minimis) but by and large the VAT operates like a sales tax which many US states also have (as do Canadian Provinces and AU residents). For sake of comparison, they are not usually conflated with import/tariff/duties.

maxglute 10mo ago

>expected outcome is that those consumers get to enjoy cheaper imports from China That's eco101 expectation, but reality after initial tariff chaos settles is cat-mouse of circumvention - PRC producers would price discriminately, i.e. sell to RoW slightly higher to make up for less sales in US / cover transhipment / diversion costs, arbitrage different tariff rates etc. PRC producers that still sells to US would also simply value engineer / despec more (lower quality), make US SKUs with stripped functionality etc to recoup on $ per value basis, and other shenanigans like value shifting - selling at "lower" cost but recoup via other bundled fees, i.e. buyers buy widgets low, but also have to buy "service" packages in arbitrage jurisdictions so PRC producers still ends up netting same. All these strategies are happening btw. The main issue is PRC producer advantage is so large and the tariff execution so leaky that they can still underprice and get products to US at profit to stunt US reindustrialization. Meanwhile PRC industrial index for manufacturing is increasing while producer index dropping because they have access to cheap renewables / discounted sanctioned fossils, so their input costs dropping vs RoW, allowing them to make more, by selling cheaper, which extends gap of how much tariff shenanigans/engineering they do to mitigate the goal of US tariffs in the first place. Hence PRC exporting record #s and US SME manufacturing index on 3rd quarter of contraction from tariff drama. Meanwhile, much of RoW without PRC god tier industrial chains, simply left with eating straight shit on US tariffs vs PRC who has much more tools to circumvent. It's like how regulations favor big incumbents with most headroom/resources to exploit loopholes. TLDR supply chain manipulation by the worlds largest supply chain skews expected market equilibrium.