Global Experts Reject Trump's Criticism of VAT as a Trade Barrier:

U.S. President Donald Trump has called value-added taxes (VAT) an unfair trade practice, claiming that they contribute to America’s trade deficit. He argues that U.S. exporters face disadvantages because they pay VAT abroad, while foreign goods enter the U.S. VAT-free. Despite these remarks, experts and officials say that VAT remains neutral in trade and widely supported by the World Trade Organization (WTO).

VAT is a Global Standard

Though some U.S. political voices label VAT a European policy, it is used in more than 170 countries including China, India, Canada, and Mexico. Among developed economies in the OECD, the U.S. stands alone in not implementing VAT. Experts highlight the tax’s efficiency and its role in reducing evasion, making it a major source of government income. In the EU, VAT supports up to 35% of national budgets and contributes to the European Union's central finances.

VAT Not Comparable to Tariffs

Economists explain that VAT is applied based on where goods are consumed, not produced. It is refunded on exports to prevent double taxation and does not function as a subsidy. Unlike U.S. sales taxes that can vary throughout the supply chain, VAT applies uniformly, both for domestic and foreign producers. The issue, critics say, lies in the U.S. sales tax system, not in foreign VAT regimes.

Eliminating VAT Is Not Economically Viable

The importance of VAT to national revenue makes the idea of eliminating it impractical. For instance, Germany collected nearly $320 billion in VAT revenue in 2023—double its exports to the U.S. Most governments facing budget constraints and public debt cannot afford to lose such a reliable income stream just to meet U.S. trade concerns.

Experts Downplay U.S. Influence Over Global Tax Systems

Economist Julian Hinz from the Kiel Institute dismissed the likelihood of countries abandoning VAT due to U.S. pressure. “It’s as likely as switching the world from metric to imperial,” he said. Analysts view Trump’s VAT criticism as part of a broader strategy to pressure trading partners, rather than a serious challenge to global tax norms.