[cbkaty]

Should not our import / expoet taxes simply be equal to those imposed by the trading country....would this level the playing field?

[Brilliant]

They adjust anyway, with no effort on our part, thru the exchange rate mechanism. The problem with trying to match the taxes imposed by other countries is that they don't sell the same thing we do, so you can't really do it, and they don't impose them evenly on everything they sell. What causes the inefficiencies is monkeying with the relative prices. If you impose a 10% tax on everything, for example, it would be just the same as letting the exchange rate adjust by 10%, which is no big deal. But if you only tax certain things 10%, then you've created an inefficiency. So matching their self-imposed inefficiencies is not really in our best interest. It's smarter to simply let the market adjust. Of course, it takes a lot of time, but a slow adjustment may be more efficient than a fast one. Let the market decide that, too.