Recommendable! This dispute whether VAT is not a form of trade protectionism is decades old! President Trump may have revived it!
"... Foreign VATs are particularly harmful to U.S. exports, imposing additional costs that make American goods less competitive in international markets. In the European Union (EU), member countries apply standard VAT rates to imported goods, including those from the United States. These rates vary across the EU, with Hungary imposing the highest standard rate at 27 percent, followed by countries like Denmark, Sweden, and Croatia at 25 percent. Germany, a key trading partner for the U.S., maintains a standard VAT rate of 19 percent.
China, another major destination for U.S. exports, employs a tiered VAT system. The standard VAT rate is 13 percent, applicable to most goods, while reduced rates of nine percent and six percent apply to specific categories of products and services. For instance, the nine percent rate covers sectors such as transportation and construction, whereas the six percent rate pertains to financial and consulting services.
These VATs are levied on the final sale of goods within these countries, meaning U.S. products are subject to these taxes upon entry, effectively increasing their retail prices. This taxation structure can disadvantage American exporters, as their products become more expensive compared to local goods, potentially leading to decreased demand and contributing to trade imbalances.
Worse, the VAT is designed in a way that explicitly favors exports over domestic consumption. Countries that rely heavily on VATs, like those in Europe and increasingly China, rebate the tax on goods that are exported while imposing it on imports. ..."
No comments:
Post a Comment