Why Trump has thrown VAT into the trade stand-off
Trump says value-added taxes carry a lot of blame for America's near trillion dollar trade deficit with the rest of the world. The 170-plus countries who charge VAT — including top U.S. trade partners in Europe — insist they have no impact.
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So who to believe?
VAT got high billing in Trump's February 13 memorandum on trade barriers he wants to tackle, listing it among the «unfair, discriminatory, or extraterritorial taxes» imposed on U.S. businesses, workers and consumers.
«The most pernicious thing about the VAT is it's a double-whammy,» one White House official told reporters, complaining it is added at the border on U.S. imports, while European producers get VAT refunds when they export to the United States.
«There's a reason why Germany sells us eight times more cars than we sell them, and it's certainly not American craftsmanship or quality or anything else,» the official continued.
While that portrayal of VAT — which has been a target of many U.S. administrations — is contested, trade experts see scenarios in which it could be argued to discourage trade.
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