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    What to Know About VAT, the Tax System Used in Europe That Trump Despises

    The president says the VAT system used across Europe gives other countries unfair trade advantages. Here’s how the system started.President Trump on Thursday ordered his advisers to determine new tariff rates on America’s trading partners, a move that he said would “correct longstanding imbalances in international trade.”As part of his plan, Mr. Trump has taken aim at the value-added tax, a system used widely in Europe and elsewhere to tax the consumption of goods and services. The president and his team describe the tax as giving other countries an unfair trade advantage over the United States.Here’s what to know.What is a value-added tax?It’s a consumption tax that adds tax on a good or service at each stage of production. The final VAT is the sum of the tax paid at each stage. This system is unlike a sales tax in the United States, which is imposed by states on the final sale of the good.In Europe, VAT rates vary by country, but on average are about 20 percent — far higher than state sales taxes in the United States, which averaged 6.6 percent in 2023, according to the Tax Foundation.Value-added taxes are assessed at each stage of production for a good or service. The cost is borne by the final consumer, not by the business. If the goods are exported, much of the value-added taxes are given back to the exporter. That provides an incentive for businesses to export goods instead of selling in their home market.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Tariffs Work

    A pillar of President Trump’s policies has been tariffs, which are taxes on products imported from other countries. He has imposed or threatened to impose them as a way to influence global supply chains, raise revenue and extract concessions from other countries. But what can often be lost amid proclamations targeting other countries is who […] More

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    Trump Pushes Tariff Threats on Global Scale

    With less than a month in office, the president has pursued trade actions that could shatter the global trading system and dwarf the trade measures he took over his entire first term.President Trump is pursuing a far more aggressive trade policy than he embraced in his first term, allowing his unfettered instincts about how to put America at the forefront to guide him with little pretense of investigations or extended deliberations.Since taking office, Mr. Trump has threatened punishing tariffs on goods from every global trading partner. That includes proposals to tax more than $1.3 trillion of imports from Canada, Mexico and China — many times the volume of trade his tariffs affected in his entire first term.On Thursday, Mr. Trump proposed his most aggressive and consequential measure to date with a global rework of tariffs — a move that made it clear that the president would have no qualms about weaponizing tariffs and antagonizing trading partners to extract concessions.Mr. Trump ordered his advisers to devise new tariff rates for other countries globally, based on the tariffs they charge the United States, as well as other practices, including other taxes they charge on U.S. goods and subsidies they provide to support their industries.The president’s decision to embrace what he calls “reciprocal tariffs” could shatter the commitments the United States has made internationally through the World Trade Organization. That would end decades in which the United States has generally abided by the commitments it made internationally and would potentially usher in a new era of corporate uncertainty and global trade wars.Some of Mr. Trump’s threats could amount to negotiating tactics and fail to materialize. He sees tariffs as a powerful persuasive tool, which he is readily deploying to try to force other countries to make concessions on migration, drug enforcement and even their territory. But he and his base of supporters also view them as a crucial policy in their own right, a way to reverse decades of factories leaving the United States and to create jobs and shrink trade deficits.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Whiskey Offers Window Into the Pain of a Trade War

    Liquor is leverage as the world careens toward another trade dispute. European tariffs on American whiskey snap back after March 31 unless an extension is granted.Liquor lobbyists gathered in a ritzy private club on a recent rainy evening in Brussels to swill cocktails with names like “Toasts Not Tariffs” and fret over the potential disaster confronting their industry. Again.Seven years ago, the spirits industry found itself a casualty in a worldwide trade war as President Trump unleashed tariffs on America’s partners. The European Union retaliated with a spate of tariffs that included a 25 percent charge on American whiskey — aiming to deliver a blow to Senator Mitch McConnell, Republican of Kentucky and the then majority leader. A series of tit-for-tat tariffs followed, hitting spirits from rum to cognac on both sides of the Atlantic.The levies were suspended during the Biden administration, but with Mr. Trump back in office and trying to rewrite the rules of global trade once again, alcohol is back in the crossfire.The European Union suspended the tariffs in question in 2021 and extended that decision in 2023, but the hiatus lasts only until March 31. After that, ramped-up tariffs of 50 percent will automatically apply to American whiskey, and charges will hit a range of other goods, including motorcycles.But it is the spirits industry that has been the most vocal about the risks the levies pose. Industry leaders and craft distillers say the taxes would decimate their export business, especially in growth markets like Germany and France, while risking retaliatory tariffs that would hit other kinds of alcohol.Bars have been importing extra bottles to try to get ahead of a trade war, distilleries have been putting overseas expansion plans on ice, and industry leaders have been flocking to Brussels, Washington and Rome, where Prime Minister Giorgia Meloni has become Mr. Trump’s bridge to Europe, to try to convince policymakers to help them avoid the looming pain of tariffs.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Where China’s Exports Begin: Inside the Vast Markets of Guangzhou

    Rows of white concrete buildings near the Pearl River in southern China house one of the world’s fastest-growing industries: Gritty workshops are churning out inexpensive clothing that is exported straight to homes and small businesses around the world. No tariffs are paid, and no customs inspections are conducted.The laborers who make these goods earn as little as $5 an hour, including overtime, for workdays that can last 10 hours or more. They pay $130 a month to sleep on bunk beds in tiny rooms above factories packed with sewing machines and mounds of cloth.“It’s hard work,” said Wu Hua, who sews pants, seven days a week, at a factory in Guangzhou, a vast metropolis that straddles the Pearl River.E-commerce giants have forged close links from international markets to workers like Mr. Wu, shaking retailing and economies around the globe.The number of duty-free shipments to the United States has risen more than tenfold since 2016, to four million parcels per day last year. Similar shipments to the European Union have climbed even faster, reaching 12 million parcels a day last year. Duty-free shipments to developing countries like Thailand and South Africa have also surged.Now a global backlash is underway. President Trump ordered a halt on Feb. 4 to the duty-free entry, without inspection, of parcels with goods worth up to $800. Mr. Trump temporarily suspended his order to give officials time to devise a plan for dealing with the mounds of parcels that immediately started piling up at airports for inspection.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Announces ‘Reciprocal’ Tariffs Across the Globe

    President Trump on Thursday set in motion a plan for new tariffs on other countries globally, an ambitious move that could shatter the rules of global trading and is likely to set off furious negotiations.The president directed his advisers to come up with new tariff levels that take into account a range of trade barriers and other economic approaches adopted by America’s trading partners. That includes not only the tariffs that other countries charge the United States, but also the taxes they charge on foreign products, the subsidies they give their industries, their exchange rates, and other behaviors the president deems unfair.The president has said the step was necessary to even out America’s “unfair” relationships and stop other countries from taking advantage of the United States on trade. But he made clear that his ultimate goal was to force companies to bring their manufacturing back to the United States.“If you build your product in the United States, there are no tariffs,” he said during remarks in the Oval Office.Howard Lutnick, the president’s nominee for commerce secretary, said the measures could be ready as soon as April 2. He will oversee the plan along with Jamieson Greer, Mr. Trump’s pick for trade representative, if they both are confirmed to those posts, and other advisers.The decision to rework the tariffs that America charges on imported goods would represent a dramatic overhaul of the global trading system. For decades, the United States has set its tariff levels through negotiations at international trade bodies like the World Trade Organization.Import Taxes Around the WorldThe average tariff rate the United States charges for imports is relatively low compared with that of most other countries. In general, wealthier countries tend to levy lower tariffs than poorer ones. More

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    Who Pays for Tariffs

    A pillar of President Trump’s policies has been tariffs, which are taxes on products imported from other countries. He has imposed or threatened to impose them as a way to influence global supply chains, raise revenue and extract concessions from other countries. But what can often be lost amid proclamations targeting other countries is who […] More

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    Steel and Aluminum Tariffs May Raise US Manufacturing Costs

    Duties of 25 percent on steel and aluminum will flow through to car buyers, beer drinkers, home builders, oil drillers and other users of metal goods.America has seen this movie before: President Trump, who imposed stiff tariffs on Monday on imported steel and aluminum, did so once before, in 2018. So domestic industries have a pretty good idea of how the story ends.Manufacturers of trucks, appliances and construction equipment scramble to find U.S. sources of metal inputs, keeping steel and aluminum producers busier than they were before. Companies that need specific alloys that aren’t made domestically are forced to pay more. Prices rise, making end products more expensive.But there may be plot twists along the way. Will Mr. Trump cut deals with some countries, allowing large shipments in without the new duties? Will he set up a process to give companies a reprieve if they can demonstrate a hardship? (On Monday, a White House official said there would be no exclusions.)All of those could affect the outcome, which is why steel users are proceeding with caution. Angela Holt, who runs a precision machining company and heads the board of the Indiana Manufacturers Association, says the potential impacts on businesses are “complex.”“It could affect not only the cost but the availability, depending on their situation,” Ms. Holt said. “It’s highly varied, even among industries — I think it’s going to depend on an individual basis where they source their materials, what the competition looks like.”Lessons From Last TimeAlthough the American steel and aluminum industries are far weaker than they were in their heyday in the 1970s, U.S. companies import only about 26 percent of the steel they use, according to the International Trade Administration, and that number has been falling.Aluminum and Steel Prices Remain Elevated PostpandemicProducer price indices show a slight increase after tariffs were imposed in 2018, but lockdowns and increased demand for goods made a bigger impact two years later.

    Source: Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More