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President Trump said that foreign value-added tax systems will now be considered similar to tariffs in his latest plan to impose new US tariffs.
“We will consider countries that use the VAT System, which is far more punitive than a tariff, to be similar to that of a tariff,” Trump said in a post on Truth Social about the decision.
“Sending merchandise, product, or anything by any other name through another country, for purposes of unfairly harming America, will not be accepted,” he added.
A value-added tax is a type of national percentage tax added to goods and services at each phase of production. It is used in at least 175 countries globally.
The US, which instead employs state and city taxes, is one of the few exceptions.
The new tariffs will likely be felt the most in the European Union, which has value-added taxes of almost 22%.
Trump said the policy is in the interest of “fairness” and aims to bring trade reciprocity and prosperity.
“Whatever countries charge the United States of America, we will charge them . . . No more, no less!” he wrote in his post.
Trump announced the initial reciprocal tax order on Thursday.
It requires the Office of the US Trade Representative and Commerce Secretary-designate Howard Lutnick to draft recommendations, and the Office of Management and Budget to submit a fiscal-impact report within 180 days.
The recommendations and reports could come after the first levies are already imposed.
Also in the crosshairs are India and Japan.
A White House official called India “the maharaja of tariffs” and noted that Japan has steep non-tariff barriers to US imports.
The tariff increases would be customized for each country, with the partial goal of starting new trade negotiations, according to reports.
EU officials have said they’re considering adopting the lower rate to appease Trump.
The White House listed examples of disproportionate taxes, including Germany’s current 10% car import tariff versus America’s 2.5%; Brazil’s 18% ethanol tariff versus the US’s 2.5%; and India’s 39% tariff on agricultural goods versus the US’s 5%.
Since taking office, Trump has also announced plans to hike up tariffs on Chinese goods, as well as a flat 25% tariff on steel and aluminum imports.