Stop Saying a Value-Added Tax Is an Export Subsidy

Brian Albrecht March 31, 2025

Truth on the Market View Original Source

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In a recent Financial Times opinion piece, Jason Cummins (who holds a Ph.D. in economics from Columbia University) argued that the Trump administration should impose a 25% tariff on European goods to offset an “unfair advantage” from Europe’s value-added tax (VAT) system. According to Cummins, European exporters like BMW Group enjoy an “implicit subsidy” when they receive VAT rebates on exports, while American companies like General Motors Co. are disadvantaged when they sell to Europe.

This argument sounds logical on its surface. After all, BMW does get a VAT refund when exporting to the United States, while GM faces the full VAT when selling to Europe. Doesn’t this create an uneven playing field?

No. No way. Not at all.

Read the full piece here.