Yes, we're on the same page I think. For context, this thread was originally about to what extent VAT is comparable to tariffs. For example, say country A has a end-consumer tax of 20% and country B has one of 10%, and neither has tariffs or other trade barriers. On the surface, we might expect country B to have a trade surplus due to having comparatively cheaper exports. But what if they instead they have a deficit?
Country A is less dependent on B than the other way around, and they are able to enrich their country with the extra tax revenue. Maybe they even use this tax revenue to invest or incentivize what's needed to become even less dependant on country B. Now suppose country B increases their tariff until the trade balance is zero. In this scenario, all country B is really doing is increasing their own tax revenue to match that of country A.
As are tariffs.
Yes, but tariffs are not paid on local products, of course, and create a real asymmetry in favour of the local products (of course).
Yes, we're on the same page I think. For context, this thread was originally about to what extent VAT is comparable to tariffs. For example, say country A has a end-consumer tax of 20% and country B has one of 10%, and neither has tariffs or other trade barriers. On the surface, we might expect country B to have a trade surplus due to having comparatively cheaper exports. But what if they instead they have a deficit?
Country A is less dependent on B than the other way around, and they are able to enrich their country with the extra tax revenue. Maybe they even use this tax revenue to invest or incentivize what's needed to become even less dependant on country B. Now suppose country B increases their tariff until the trade balance is zero. In this scenario, all country B is really doing is increasing their own tax revenue to match that of country A.