Oh so what Trump is saying is.... stop... buying american products, buy European instead? Okay, will do!
this post was submitted on 13 Feb 2025
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Drop tariffs on China in response and increase trade with them significantly. Accelerate the global irrelevance of the U.S, basically
In particular, he aims to target the European Union in response to its value-added tax (VAT), which applies to all products and is viewed by Washington as a non-tariff barrier.
What? This makes no economic sense.
Can someone enlighten me what this is about?
It's Trump. It doesn't have to make sense.
He says something bizarrely stupid in like every speech, and every indication is it's because doesn't know better. Even his supporters know it.
That being said, in this case he probably started with the tariff, and then worked backwards to a vaguely legal justification to keep the courts away.
It's fucking stupid. Most EU countries charge VAT (value added tax) on pretty much everything you buy. It doesn't change based on where the product is made or anything, so it is a level playing field, therefore I don't know wtf Cheeto is attempting to achieve here.
You always need a casus belli to start a war. Nobody said it needs to be a reasonable, logical or even true thing.
I guess we learned by now, that basically nothing Trump says makes economic sense (not for the US in general, that is). That being said: Even though I get used to Trump's insanity, I'm definitely surprised by this one as well.
what a fucking tool
Did this muppet really say he thinks VAT is a tariff?
Can't make this shit up!
You can't make most of his shit up.
"VAT - Vaccinated Antifa Tariff," Musk, probably
If vat is a tariff, then US sales tax is a tariff as well. This means we are already at tariff wars so no need to change anything.
Isnt a sales tax and VAT literally the same thing? Both sales taxes and European VAT are examples of VAT. (I hope theres no differences im missing).
More importantly, VAT usually applies to all products, regardless of origin. And its not that big of a leap now, from calling VAT a tarrif, to call any form of taxes tariffs (incl. income tax).
Yes. Typically the VAT is due along the entire supply chain. So while every business has to declare and pay VAT for its sales, it can reduce its obligations by the VAT it already paid on the things it bought. So your 20% VAT (example value) is not in every step of the chain, but reflects the taxation of the entire chain.
Now obviously, if you import something, the importer cannot reduce his VAT obligations in for example Germany, because his price included the VAT that the exporter paid in the US.
This is already a huge problem inside the EU, where things ended effectively with most cross border businesses not being subject to VAT. So for inside the EU the exporter does not declare VAT on his export and the importer cannot reduce his VAT obligations by the VAT that wasn't paid.
So in practice the VAT does encourage to buy a product inside the EU instead of from the US, if the price without taxes is the same. This goes both ways though.
A similar instrument to the EU one could be negotiated with the US, so that it makes cross border trade more attractive, but we know that the US has no interest in holding up its side of that bargain. Also it does come with a can of worms, as these systems often are subject to exploitation. https://en.wikipedia.org/wiki/Missing_trader_fraud
The difference is only in how it is collected. Sales tax is only applied in the final sales, whereas VAT is applied at every step.
Collected and subsequently reimbursed, such that VAT is only in effect being paid at the point of the final sale.
This is not entirely accurate but it's accurate enough to be useful for this conversation
are you still shocked after - checks note - 8 years?
I try not to follow US politics too closely, so... yes, a little, every time shit like this makes it to world news.
