Tariff Questions

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.

https://www.uscib.org/valueadded-taxes-vat-ud-1676/

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