The American exporter does not pay the VAT, the purchaser in Germany pays it.
It doesn't much matter if the seller or the buyer officially pays it. Its a tax on the transaction. Who gets the tax incidence is not determined by who writes the check, but by the price elasticities of supply and demand on the good and service.
If you tax soda sales say 25 cents per 12 ounce can
Lets say the buyer has to pay - You get downward pressure on the pre-tax price (at least in terms of delaying future price increases), so the seller gets impacted as well.
If the seller has to pay, you get upward pressure on the pre-tax price because of the extra costs to the seller.
In my simplified example I'm just having a buyer and a seller, really you have multi levels of buyer and seller, but it operates the same way just in a little more complex fashion.
All of which is about your argument more than the point your trying to make. In terms of the overall point, VAT not being a trade barrier, I tend to agree with you.
If you look at just the EU and the US (again were simplifying things, but not I think oversimplifying them), the VAT would tend to make good X more expensive in the EU then the US, but its more expensive whether or not it was produced in the US or the EU. The consumer has no extra incentive to buy the EU product over the American one. That also applies in the US, for the EU producer the VAT gets rebated (so no extra VAT cost in the price), for the US producer there is no VAT (so no impact of a VAT), if there is a sales tax applied, it affects the products of both countries equally. |
