VATs Are Weapons in the Trade War
The free trade consensus is quick to denounce tariffs. We’re told tariffs are bad because they raise consumer prices. They are a tax on consumers. They cause an inflationary supply shock. This orthodoxy insists that tariffs are damaging by their very nature, and that their primary effect is to harm the very consumers they purport to protect.
But here’s where things get interesting: introduce a Value-Added Tax (VAT) into the mix, and the entire calculus changes. VATs are not just tolerated by the free trade crowd; they are often praised. But what exactly is a VAT? It’s a tax applied to domestic consumption that raises prices on a much broader array of goods than any tariff
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