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Comment by StormChaser_5 | Hacker News Reader

It's not like the tariffs are gone. It's still 10% for everyone but China. That only seems small in comparison to what was being proposed before. I wonder will EU and others wait out 90 days while negotiating or match the 10% in kind

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Hopefully EU will still go ahead with the tariffs. We should not be dancing at the tune of the mad king.

Yes, but what's the rush here?

The EU should do what does best: make things boring.

If retaliatory tariffs is the way to go, maybe do it the boring way: considered bit by bit, no flashy announcement.

Or just make a 10 year deal on LNG so Trump can say we're paying the US money every year.

That seems to be the current strategy, and I happen to appreciate it.

I'm pretty mad a the US for fucking up the entire world right now, but I also realise that acting on that anger is a bad idea. I appreciate the EU having some long discussions while the emotions fade.

> The EU should do what does best: make things boring

Exactly, the absolute best thing the EU could do right now is project stability

You think that's gonna be the best outcome?

EU already had 10% tariffs on all US autos. (Though tbf most other things were near zero.)

> It's still 10% for everyone but China.

There's actually some confusion about that. They said they paused the global tariffs but didn't mention the Canada and Mexico tariffs.

If the 10% global tariff is in addition to the Canada and Mexico tariffs, the net tariff rate on those countries could be quite high. Combined with 125% tariffs on China and we would have very burdensome tariffs on 3 of our largest trading partners.

The rally is because Trump caved to pressure and is backtracking earlier claims that he wasn't going to change his policy.

Mexico and Canada are still at 25% apparently.

Didn’t the global “reciprocal” tariffs exempt Canada and Mexico?

If USA keeps 10% tariffs for everyone equally, why should we interfere? Serious question.

I believe that Trump is shaking things off, but his goal is to introduce a fixed "tariff" like a soft VAT.

He is just testing (and profiting with $$$$$) what happens when you do things like 30% there, 24% there, etc. But his long term goal is a fixed tax. In that context, who are we to judge them? We also have VAT on imports.

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?

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.

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

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?

EU has already had tariffs on US goods for a long time.

Not as broadly to that extent though. Trump's tariffs are 10% of anything, so Europe will reciprocate in kind.

>> Trump's tariffs are 10% of anything

What percentage is VAT in Europe? Typically around 20%? Maybe Trump should enact a 10% sales tax instead of a tariff and then everyone would obviously be completely fine with it, problem solved.

VAT are not tariff, we pay it on domestic products as well.

Maybe you should learn how VAT work? If you actually know better then all the economists, explain in detail how VAT is like a tariff instead of repeating this trite lie?

The world wouldn't care if he introduced a federal 10% sales tax (provided it was implemented similar to VAT, ie. non-protectionistic)

> repeating this trite lie

The WH repeats this lie constantly. Anytime they get pushed on the absurdity of tariffs they mention VAT like it's in anyway related. The right wing outlets then amplify and we further dumb down America.

Yes, because that would apply equally to US businesses.

I would presume that EU products sold in the US are charged sales tax already(for those states that have it).

The difference between sales tax and tarrifs is it applies to all products within the same category irrespective of its origin.

Obviously other countries would be fine with Trump enacting a sales tax / VAT on everything. Why wouldn’t they be?

Because it would reduce US consumption of their exports. Just as a tax on consumption of up to 27% in Europe massively reduces Europe's consumption of US exports.

> Just as a tax on consumption of up to 27% in Europe massively reduces Europe's consumption of US exports.

Same way it reduces the consumption of domestic goods? Seems like fair level?

>> Seems like fair level?

No, it does not seem fair for Europe to take measures to dramatically reduce European consumption of US exports when the US does not take measures to dramatically reduce consumption of European exports. To be fair, the US would need to do something to dramatically reduce US consumption of European exports.

And I happen to know just the guy to do it.

Seems like fair level?

I think you have the wrong understanding, VAT is applied irrespective of origin, so the same reduction would apply to domestic products.

To simplify,

US product for sale for £100, then VAT would be £20 ( assuming 20% rate)

UK product for sale for £100, then VAT would be £20 ( assuming 20% rate)

it is however unfair that the US takes advantage of europe by mot having proper food and safety standards, not to mentioning using slave and undocumented labour.

same thing with privacy, the US is abusing europe by not having comprehensive privacy standards equivalent to the GDPR. only california is not defrauding the EU

> Just as a tax on consumption of up to 27% in Europe massively reduces Europe's consumption of US exports.

Uhm, it also reduces consumption of locally produced goods, not just something imported into Europe. Its like...a sales tax, the only reason it is treated differently from a sales tax at all is because of its more fair rebate system.

VAT applies equally to both domestic and imported products, unlike tariffs that apply only to imports.

MAGA really has gotten people to believe all the VAT BS. VAT is basically a sales tax for all products. It does not typically advantage import or domestic products.

If Trump wants to implement a 10% sales tax on everything purchased in the US that would not be considered a tariff and no one would retaliate.

At the risk of stating the obvious, most states already have a sales tax.

Those amount to only around 3% on average.

Per ratio closer to about 1 to 1.5 percent. It differs a bit per country due to deduction rules and additional tariffs. If you leave those out and only look at regular tariffs it is 1.39%.

* The EU has had comparatively very small and targeted tariffs on US goods for a long time

Just so we're all on the same page, instead of maga talking points.

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