Tariffs are a sales tax and operate essentially the same way.

[unblock]

Tariffs are levied on Americans who buy goods from other counties.

Sales taxes are levied on Americans who sell goods and services.

In both cases, the cost is invariably passed on to end consumers, whether it's explicitly listed on the receipt or not.

With sales taxes, it's pretty universal to explicitly note the sales tax on the receipt, but this is just the retailer's way of blaming part of the cost on the government. A retailer is free to just say "we'll take care of sales tax" as long as they pay the government the right amount. It's not a direct tax on consumers, it's a tax on retailers.

Tariffs are really the same, they're just levied a little upstream, on the importer. But the cost is passed on, it's just less common to explicitly note the separate out the tariff when passing the cost on.

So call it a tax. As a practical matter, it operates the same way. The government collected from Americans, and the consumer ends up paying more to cover it.


So there you have it. Donnie just announced one of the most massive taxes ever imposed on American consumers.

[Wounded Bear]

1. Tariffs are more like a VAT...

a handling charge that gets passed down the line to the final customer.

[MichMan]

3. VAT are very common in Canada and throughout the EU.

[Bernardo de La Paz]

13. There are NO VAT taxes in Canada. Simple ordinary sales tax pays for health care.

[MichMan]

24. Just going by what I read

Federal Goods and Services Tax (GST)

The GST is a federal tax levied at a rate of 5% on the supply of most property and services made in Canada. It is a value-added tax (VAT) applied at each level in the manufacturing and marketing chain. However, the tax does not apply to supplies that are zero-rated (i.e. taxed at 0%) or exempt. Examples of zero-rated supplies include basic groceries, medical and assistive devices, prescription drugs, feminine hygiene products, agriculture and fishing, and most international freight and passenger transportation services. Examples of exempt supplies include used residential real property and most health care, educational, and financial services.

https://taxsummaries.pwc.com/Canada/Corporate/Other-taxes

[Bernardo de La Paz]

25. I think that is a US-centric, conserva-centric misinterpretation

Businesses that purchase goods and services that are consumed, used or supplied in the course of their "commercial activities" can claim "input tax credits" subject to prescribed documentation requirements (i.e., when they remit to the Canada Revenue Agency the GST they have collected in any given period of time, they are allowed to deduct the amount of GST they paid during that period). This avoids "cascading" (i.e., the application of the GST on the same good or service several times as it passes from business to business on its way to the final consumer).[4] In this way, the tax is essentially borne by the final consumer.

The Goods and Services Tax (GST) is a multi-stage sales tax levied on taxable goods and services. The GST applies on each exchange of taxable goods and services, from the initial producer or supplier through intermediate producer or supplier to consumers. To ensure that the value added at each stage of the supply chain is taxed only once, producers and suppliers are able to recover the GST paid on their purchases of business inputs through "input tax credits."

Sheila Fraser, Auditor General https://web.archive.org/web/20060218051228/http://www.oag-bvg.gc.ca/domino/other.nsf/html/03pac08e.html

This is my understanding of it. By avoiding the cascading it is explicitly not a VAT because it is NOT "applied to each level in the manufacturing and marketing chain".

[unblock]

4. Agreed, my point is broadly these are all the same thing.

VAT is similarly levied on businesses, but ultimately passed on to the consumer.

As a practical matter, all the money ultimately coming from the consumer. The difference is more on who the government enforces collections on behind the scenes.

[Justice matters.]

5. True dat, but...

a big difference is the lower-income taxpayers get partial refunds deposits back every three months in Canada, and the sales tax help pay for programs like Universal Health Care, for example.

No sales tax is used to give billionaires and millionaires more tax breaks...

[Pototan]

19. I live in a country with a VAT

the Philippines. It's 12%. Medicine, medical and dental care, groceries, are exempt. They are imposed on most other products and services. Senior Citizens (60 Years or older) are also exempt from paying the tax for many, but not all, other items.

[MichMan]

2. Just like all other taxes on businesses like income, property, and payroll taxes

A tax is a tax. All ultimately passed on to consumers

[usonian]

6. HOWEVER, sales taxes and VAT's have to be passed by voters, whereas ...

[unblock]

7. Good point.

Technically they were, in the sense that Congress passed laws granting Donnie this authority, but yeah, other taxes don't get jacked around on the whim of one official.

[Bernardo de La Paz]

11. Red coats have become red hats under King Mucus and Been a Dick Arnold. . . . . nt

[usonian]

15. "T" should be dumped into Boston Harbor

but SF Bay will do, and has (you guessed it)

[Bernardo de La Paz]

16. T for Teslas in Boston Harbour too. . . . nt

[usonian]

20. OK as long as sharks and batteries are on opposite coasts.

[Bernardo de La Paz]

22. Good one and good pic! . . . . . nt

[flamingdem]

8. The purpose of raising revenue with tariffs is to justify

larger tax cuts for the rich.

[unblock]

9. Yes. And Donnie also likes tariffs because they're completely in his control

So he can bully other countries and domestic businesses alike and make them pay him or dance for him for exemptions.

[Wounded Bear]

28. Which they shouldn't be if Congress would do their jobs...

[flamingdem]

29. So far Argentina playing ball

Of course his right wingy pals step forward. Kiss up that is.

[Bernardo de La Paz]

10. Tariff taxes are regressive

What proportion of buying a children's school supplies at Walmart will be due to tariff taxes of 54 percent on China?

What proportion of buying an apartment building will be due to tariff taxes? Some for Canadian lumber and steel, but not much in total.

[unblock]

14. Eventually, the ordinary renter will have to cover the cost of that lumber and steel,

tariffs included.

Poor people spend 100% of their money being consumers, directly or indirectly subject to tariffs (to the extent imported).

Rich people spend a smaller percentage, down to a negligible percentage for someone like Donnie or musk. Most of their money is saved or invested.

[Hassin Bin Sober]

12. They've wanted their flat tax forever. Seems like they are slipping it in under the wire.

[Bernardo de La Paz]

17. Tariff taxes are regressive, not flat

What proportion of a vacuum cleaner at Walmart will be tariff taxes?

What proportion of buying an apartment building will be tariff taxes? A bit for Canadian lumber and steel but not much of total cost.

Which income group buys vacuum cleaners at Walmart and which group buys apartment buildings?

[Hassin Bin Sober]

18. You are correct. I was thinking more like national sales tax which is very regressive and closer to the tariffs.

[Bernardo de La Paz]

23. It is exactly that, tariffs are a national sales tax. The price taxed is the entry value. . . . . nt

[Hassin Bin Sober]

27. They've been really licking their chops for something, anything, really regressive to punish the useless eater poors.

[wishstar]

21. Also announced now charging 30% on all foreign internet purchases

Clearly a tax now tacked onto all online foreign purchases by individual customers. He had already imposed the 30% tax previously but only on sales $800 and over ending the exemption on purchases under $800.

[The Madcap]

26. The way to deal with tariffs

Is to buy less. Only buy the absolute necessities.

The bright side is that it might help curb American materialism a bit.

Self-imposed recession incoming...