You need to start with my first post which has the numbers in it. It's so straightforward.
Keep in mind always that the VAT is rebated, i.e. forgiven, on exports. That means that although a European manufacturer pays VATs all the way through the production process, at the end he is reimbursed for it when his product is exported out of the country. For him the VAT is gone. It no longer affects the sales price of his product.
The American importer, however, has to pay a VAT when his product goes to Europe. If it goes to Germany, a 19% VAT raises the price of his product by 19%. If it goes to Sweden, a 25% VAT raises the price of his product by 25%. Or if it goes to South American, to Brazil, a 42% VAT might be levied (depends on the product.) This would price many American made products completely out of the Brazilian market.
VATs can, and often do, cause the price of an import to rise so much that very few will buy it. Thus becoming a de facto trade barrier, even though the World Trade Organization says that VATs are not trade barriers.
That's why so many writers and pundits are disputing Trump's position and comments on unfair trade practices. Those writers are just lazy, I guess, and willing to simply rely on the fact that the WTO says VATs are fair. |
