President Donald Trump is planning reciprocal tariffs for 160+ countries that use VAT tax.
President Donald Trump signed a presidential memorandum on Thursday initiating a new reciprocal tariff system. This policy adjustment seeks to counterbalance the tariffs, taxes and subsidies that other nations impose on U.S. products.
« I have decided for purposes of fairness that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America we will charge them. No more, no less », Trump announced from the Oval Office on Thursday.Why It Matters
Trump’s new tariff system, described as « reciprocal », could redefine the rules of global trade by imposing higher tariffs on countries that levy high duties on American products.
Both existing tariffs and taxes like the value-added tax (VAT) applied by other countries on U.S. goods will be considered.
Experts warn this could escalate into trade wars, affecting everything from consumer prices to global economic relationships.What To Know
The new tariffs would consider not only existing tariffs but also taxes like the value-added tax (VAT) applied by other countries on U.S. goods.
VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. Each participant in the supply chain pays VAT on their purchase price and charges VAT on their sales price, making this system widely prevalent in over 160 countries, particularly in the European Union.
In contrast, the U.S. primarily utilizes a sales tax system, which is only applied at the final sale to the consumer.
