The Trump administration will respond with taxes with the aim of leveling the rates that other countries apply to American exports. After the specific rates have already been announced about steel and aluminum, the most affected sector would be the car.
The President of the United States, Donald Trump, signed a memorandum on Thursday to impose the European Union (EU) “mutual rates” among the most important victims.
Rates are taxes that a country imposes on imported products with the aim of making its price more on the local market and therefore to reduce its demand.
In this case, the United States will apply to imported foreign products, a rate that is equal to what the American exports pays in each of the countries.
“I have decided that I will impose mutual rates for justice reasons, which means that what a country makes the US pay. We will charge them the same, nor less,” Trump said.
Trump’s lies: VAT “is a hidden rate”
Trump accuses the EU of being “absolutely brutal in trade” and to impose what he describes as “an undercover rate” by VAT (tax of added value), which varies between 17 % in Luxembourg and 27 % in Hungary.
The expert in Economy Nico Cuenca has explained in Euskadi Irratia that VAT is a tax, not a rate and that Trump is lying. He also pointed out that if we actually compare the rates between the United States and the European Union, the US applies more rates to the EU than in reverse.
These will be rates rates
Each state will be confronted with personalized rates, as explained by a high American official before signing the memorandum. A uniform rate of 10 % or 25 % will not be applied, but the administration will set specific rates based on rates and commercial “barriers that each imposes on the US.
The most affected sectors
Today, the United States applies a rate of 2.5 % to imported vehicles, but this figure can rise to 27 %.
The EU currently imposes a rate of 10 % on imported cars, in addition to the VAT of the community, which is at least 17 %. That is why the US would apply an equivalent rate with the new policy, with a rate of 10 % and the corresponding percentage of VAT, which could increase the total rate to 27 %.
The pharmaceutical sector and those of semiconductors or chips will also be damaged.
When will they work?
New rates will not immediately sign the Memorandum signature.
The first step will be the effect, within 180 days, of a report on all tax impact that must be delivered to the president, as laid down in the memorandum.
The latest protectionist measures are added to imposing 25 % of the rates for all imports of steel and aluminum, without exceptions or exemptions, which enter into force on 12 March.
Source: EITB
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
