Europe’s VAT Hurts the US? Retaliate With a VAT

The Trump administration isn’t satisfied with the mayhem it has already inflicted on global trade and investment. Its next step, President Donald Trump says, will be to introduce comprehensive “reciprocal” tariffs. US import taxes are low by global standards, officials correctly point out. So trading partners had better lower theirs to the same rates. Otherwise, starting next month, they’ll face higher matching tariffs on their exports to the US.

By Trumpian standards, this sounds almost sensible. Reciprocity was a cornerstone of the old-fashioned approach to trade liberalization, so advocates of freer trade might be tempted to applaud. Except that the right way to lower trade barriers is through orderly negotiations not chaotic peremptory commands. And except that the president is actually opposed to old-school reciprocity; his goal is not to level the trade playing-field but to tilt it in favor of the US while extracting tribute from other countries. And except that he isn’t just talking about responding to other countries’ tariffs; in deciding how harsh the sanctions should be, US officials are weighing many other factors — including value-added taxes.