Europe's VAT is not a Tariff

 Today while discussing Tariffs, Trump said Europe imposes tariffs on us in the form of VAT (Value Added Tax) so we should do the same to them. And the press sat their like statues saying nothing to the liar. VAT is a consumption tax. Here is how it works. Suppose I am French and I have a company that sells cars. I buy some parts from Hungary. I pay VAT tax which goes to the Hungarian government. Now I sell my car to someone in France. The car buyer pays me VAT tax which goes to the French government. But because I paid VAT tax to Hungary for the car parts, I can deduct what I pay the French government. So if I charge 100000 Euros for my car and pay 15000 of VAT, but I paid 5000 for the car parts, I only pay 10000 to the French government.

American companies DO NOT pay VAT. If a Mercedes dealership buys Mercedes cars for sale in the US, the VAT does not apply. Only tariffs are paid. Mercedes has to show to the German government the cars are for export and no VAT applies. VAT applies within Europe’s borders while tariffs apply across borders.

Thus, Trump either has no idea what he is talking about, or is outright lying. And the White House press corps said nothing. Australia also has a consumption tax called GST (goods and services tax) which works exactly the same way as VAT with the above. Since I have a business, I need to know all about GST so if Facebook had fact-checkers, they would have no issue with what I have said. When an American beef importer buys Australian beef, they DO NOT pay Australia’s GST which is 10% because like VAT, the tax does not apply to exports.

In short, VAT has nothing whatsoever in common with tariffs.