Letter from Chip Northrup

What’s the True Value of a VAT?

Republican politicians have wanted to implement a national sales tax, in the guise of a value-added tax, or VAT, for decades. A VAT is the centerpiece of most tax regimes in Europe and in Asia, where it averages 10-15 percent.

By unilaterally imposing a higher tax on imports, Trump will effectively create a de facto VAT on many imported goods from our three largest trading partners—China, Canada and Mexico. The tariff is collected when the goods are imported into the U.S., but the cost of the tax is passed along from the importer to the distributor, to the retailer, to the consumer.

Unlike a progressive income tax, the Trump Tariff Tax is regressive, meaning the less you make, the more its impact on your wallet. It is an excessive tax burden on the poor and the lower middle class.

This should come as no surprise, since a VAT is called for in Project 2025.

“Buy American” only works if the cost of the U.S.-made item is less than the imported products plus the tariff. The domestic supply chain will simply raise the price of the item to that of the foreign competitor. The net effect of tariffs is inflation.

Chip Northrup
Cooperstown