More on Tariffs (2)

Commentators are upset by the Trump Tarriff of 15 percent tariff imposed on the EU. Something that is missed in the debate is that the EU is primarily a customs union. The EU protects it businesses with taxes and duties that are charged against imports from countries outside the EU. Countries in the EU impose Value Added Taxes of between 20 and 28 percent. In contrast, sales taxes imposed in the United States range from 6 percent to 12 percent. So a tariff of 15 percent just about matches the taxes already imposed on US goods by the EU.

In New Zealand, businesses are upset about the 15 percent tariff on goods exported to the United States. But this exactly matches the rate of GST that is imposed on American goods imported into New Zealand. This is hardly unfair.

That does not mean it is right. Any disruption to trade is probably bad for a trading nation like New Zealand. See Tariffs.