On February 10, 2017 we post we posted Border Tariff or Border Adjustment Tax or US VAT? where we discussed that there's a lot of talk these days about borders and taxes in Washington. U.S. President Donald Trump wants to hit firms that outsource with a simple tariff on imports, but republicans in Congress have pitched a more complex idea, a border adjustment, built into a corporate-tax overhaul.
The idea is that U.S. companies that import goods in VAT countries (i.e., almost every other country in the world) are being charged with import VAT. This import VAT is creditable/recoverable for domestic importers, but not for U.S. importers. Therefore, U.S. companies that import goods elsewhere are significantly worse off than domestic traders. This is protectionism and must be retaliated against.
Now according to TradeReady in addition to a potential border adjustment tax (BAT), President Trump has also threatened to impose a 45% tariff on imports from China. Imported goods that would be affected by this tariff include clothes and electronics. According to the Tariff Act of 1930, President Trump could impose “tariffs of up to 50% and then, if escalation was required, block imports completely.”
What is a Bonded Warehouse?
What is a Foreign Trade Zone?
Read more at: Tax Times blog
