A tariff is a federal
sales tax on imports. The US has imposed tariffs since 1789 to provide federal
revenue and to encourage US manufacturing and agriculture. The entire US
federal government revenue prior to 1913 relied on tariffs, duties, fees and
land sales. All countries have imposed tariffs for centuries and they still do.
In addition most
countries impose a VAT tax and that is another sales tax imposed to generate
revenue for the government. The US has no VAT tax and no federal sales tax of
any kind. Sales taxes are imposed by States, counties and some cities.
All countries want the
cars their citizens buy to be made in their country and auto makers have final
assembly plants located in the countries that buy those cars. But global
sourcing of parts means that not all the parts for these cars are made in the
countries that have the final assembly plants. The absence of tariffs or very
low reciprocal tariffs allows all manufacturers in all countries a level
playing field.
All countries have
powerful, politically active special interest industries that own their own
politicians and they protect these industries. The economies of Germany and
Japan depend on their large automobile industries.
The 25% tariff imposed
by Germany on US auto imports compared to the 2% tariff imposed by the US on
German auto imports needs to be addressed.
Trump is pressing
Germany to lower their tariff to 2% and I’m sure the German auto lobby is
opposed.
A car or
other motor vehicle imported
to Germany from
outside the EU is normally subject to
a 10% import duty and a 19% import value
added tax. (The value-added
tax on imports is called import turnover tax
Japan imposes an 8%
tax on all imports and imposes a 5% consumption tax.
Norb Leahy, Dunwoody
GA Tea Party Leader
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