Riddle me this John F Di Leo. The rest of the World imposes a value added tax on goods sold in their country. So stuff we made here is already taxed by us as income and sales and then again by them with their VAT. Our companies have to compete against this double standard. How? Cut worker wages?
Close down factories in the states and reopen overseas. Blue collar types can go on welfare and take drugs. Makes for a strong country. Or something.
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.