You have VAT on more or less everything, imported or not. A “VAT” that _only_ applies to imports absolutely still deserves retaliatory measures.

Not true. VAT is not applied on exports outside of EU.

I think you misunderstood: VAT is applied to (approximately) everything a citizen of a country buys: imports and domestically produced products. Exports from a country are entirely irrelevant to whether applying VAT to imports is unfair to US imports to that country, as compared to the US charging a “VAT” on _only_ its imports.

VAT is applied to services too, at least here in Europe.

Now, if we were to split VAT in two: 1. tax on imports, 2. tax on whatever goods/services people in that country pay/buy, you could keep just the 2 and have free trade with other countries with zero tax. Or the opposite, do tax on imports and free trade inside your country.

The fact that VAT has always been like that (1 and 2 together), it doesn't mean it has to stay that way.

Not sure why we should care about how a country decides to apply taxation in their own country, especially if that country sets a more or less equal tax for everyone - that's understandable.

   > 1. tax on imports, 2. tax on whatever goods/services people in that
   > country pay/buy, you could keep just the 2 and have free trade with
   > other countries with zero tax.

That is completely ridiculous. Why would there a VAT on, say, domestically produced pasta on the grocery shelf, while the Italian import pasta right next to it has none?

To allow free trade of certain goods which your country needs more.

This is why tariffs are much more flexible, because they allow you to, let's say, trade oil at a cheaper price, while pasta (widely produced in europe) at a higher price.

Then you would just not tax those goods. We already do this with basic foodstuffs; this has nothing to do with tariffs.

So what you are suggesting is a reverse tariff? Punish local producers for manufacturing goods that we’d rather import.

Well.. that’s an idea.. I suppose..

VAT is never universal, different products already get different rates.

VAT doesn't affect free trade in any way though. You're mixing up unrelated concepts.

It's how the EU today works BTW. In german shops you can buy locally produced pasta or imported Italian pasta (no import tax), both with 7% vat on it. Now you can claim "but this is EU...".

Why can't this free trade be done with individual countries for specific products then?

You and the parent poster are talking past each other. They asked:

> Why would there a VAT on, say, domestically produced pasta on the grocery shelf, while the Italian import pasta right next to it has none?

You answer (correctly) that that isn't the case, both boxes of pasta have the same VAT applied to it.

In light of this, I think people are really struggling to understand what you're arguing for or against here. The whole subthread started by someone pointing out that the 10%-for-everyone version of trump's tarrifs is very different from European VAT, since European VAT applies to all products sold to consumers, regardless of whether they are imported or not. That is, indeed, a vital difference. You seem to argue that it's not the case, while giving examples of how it is the case, leaving everyone confused.

You cannot possibly make imports VAT excempt, that's just instantly destroying your domestic market for no gain anywhere.

There a lot to be said for ignoring other countries tariffs and just having free trade. Hong Kong and Singapore basically did that for decades and grew fast and became wealthy. Tariffs mostly hurt the countries introducing them.

There are some exceptions. Sudden changes can be painful if you built a factory to service some market and they block the sales all of a sudden. But a 10% across the board tariff may not make it worth retaliating.

> Hong Kong and Singapore basically did that for decades and grew fast and became wealthy. Tariffs mostly hurt the countries introducing them.

Wouldn't you say the same thing about VAT?

VAT is basically just a fancy sales tax. You've got to get money for education, health and the like somehow.

HK and Singapore did have low tax and small government which probably helped them.

So... VAT is a better approach than tariffs because it does a lot more economic damage? That's not very compelling.

Why forgive VAT what we can't stand in tariffs?

Not true. VAT does way less economic damage. Tariffs introduce massive distortions in the market.

This is like saying income tax is a tariff because it stops people from buying more imported product.

It's like saying income taxes and tariffs do their damage in similar ways. They do. Income taxes are another thing that mostly just hurts the country introducing them.

Lets extend your logic then: VAT is another thing that mostly just hurts the country introducing them.

Is the United States trying to free Europeans from the tyranny of their government? Americans should also stop paying sales tax and income tax.

What does VAT have to do with anything? What are you even trying to say? It applies both to domestically produced products and imports in the same way..

> Why forgive VAT what we can't stand in tariffs

Now replace VAT in that sentence with incomes tax, alcohol duty, property taxes.. makes no sense.

VAT applies equally to domestic and imported products and doesn't affect the balance. Tariffs only apply to imports, thus giving domestic producers an advantage (either lower prices or higher profit margins).

It's not a fixed tax where there is the same rate everywhere: when you check the tariff table, you can see that there is a different rate for each item (e.g. 9.4% for Cotton Jeans) and then it says in Chapter 99 that you pay "9.4% + xxx%" where xxx is the special rate for the country.

So it's xx% that goes on top of a rate defined by the type of the item.

> We also have VAT on imports.

And the US has sales tax.

VAT is paid on all products, it doesn't matter if it's domestic or imported!

Who cares? From the standpoint of someone selling you something, their product will be sold for 20% more (and they don't get 1 cent out of it).

Importers care because unlike VAT or sales tax, it makes them x% more expensive than competitors. Consumers care because tariffs paid are in addition to sales taxes or VAT.

So the US should drop the sales tax then?

> We also have VAT on imports.

Maybe you should not repeat these nonsensical talking points?

VAT applies to everything, both imports and domestically produced goods. This reasoning makes even less sense than Trump’s ChatGPT tables…

> but his goal is to introduce a fixed "tariff" like a soft VAT.

You really don’t understand at all what VAT is?