President Donald Trump announced Thursday that his administration's mutual tariff policies include foreign value-added tax (VAT) and non-tariff barriers. Unfair to our businesses.
In a post on X, Trump reiterated his commitment to mutual tariffs, saying that the US imposes obligations equivalent to those imposed on other countries. He said the policy explains VAT and other trade barriers that act as indirect tariffs.
“For the purposes of this US policy, we consider countries using the VAT system, which is much more punitive than tariffs, similar to that of tariffs,” he writes. . He also said non-monetary trade barriers will be considered in tariff calculations, including regulations restricting US companies to operations in foreign markets.
Widely used in Europe and many other countries, VAT applies taxes at multiple stages of production, but is usually refunded in exports. This means that European companies will export their products to the US. This is a VATS refund. This is a significant financial incentive for export. Because the US does not have a VAT scheme, US companies are unable to use “export bonuses” and US products face VAT when sold in Europe. US authorities have long argued that the structure puts American companies at a disadvantage by allowing foreign companies to sell goods overseas with effective tax refunds, but the US officials have argued that Exports are subject to foreign VAT.
Trump's directives also target what he called “non-monetary trade barriers,” beyond tax policies. This includes licensing rules, government subsidies, and restrictions on market access that makes it more difficult for American goods and services to compete overseas. He showed that the administration quantifies these barriers and applies tariffs accordingly.
The expansion of tariff policy follows Trump's broader efforts to restructure US trade ties by using import operations as a negotiation tool. Under the new plan, countries that want to avoid US tariffs have the option to reduce or eliminate their own trade barriers.
The administration argues that the policy will encourage more domestic production and provide greater equity in international trade.
“There are no tariffs when manufacturing or building products in the United States,” Trump said in his post.
