It’s my understanding that VAT applies to the increase in value of a product as it moves through various stages or production. Something like taxing the increase in value gained by going from pig iron to automobile body. The result is that the retail price of the item contains the VAT it attracted and no further taxes are required.
Stuff we make here should be cheaper because all that tax is not loaded into the final price. Companies pay tax on their profits, which can vary wildly. I don’t see any double standard. VAT is insidious because it is a hidden tax, thus easier to be raised without public outcry.
Fiscally, tariffs are not that great an idea because they go into government coffers, reducing pressure on the govt to reduce spending. Economically, it is a transfer of money from the consumer’s through higher prices, which stifle demand. As an instrument of trade policy, it will be interesting to see the fallout.
I don’t agree with your understanding of the VAT at all. The VAT is like a sales tax. The consumer pays the full tax. The producers pay their incremental portion along the production line but recoup their added contribution as it passes on down the line. Hence the consumer eventually pays it. The value added tax countries don’t have income taxes. They have the VAT. VAT countries levy the VAT on domestic and foreign goods equally.
The United workers and companies pay income taxes on goods they make before they are sold domestically or overseas.
When we buy a product from a VAT country it is sold to us without the VAT added on to the cost. When we sell our goods to a VAT country, they add on their VAT. In effect they are levying tariffs on us. If tariffs are so debilitating to the economy, explain how China has roared to the front of the line in world manufacturing?