How Trump’s aim to impose tariffs on countries with GST regimes impinges on national sovereignty

The latest round of proposed tariffs from US President Donald Trump includes a response to what the White House describes as “unfair” taxes – specifically, value-added taxes such as Australia’s Goods and Services Tax.

Most economically advanced countries have a value-added tax or sales tax on consumption. This applies to domestic goods and services as well as to imports. The United States is one of the few countries that does not impose a sales tax, though many of the states impose their own sales tax.

So the argument, according to the White House, is these taxes apply to imported goods, but not to exports.

A tax or a tariff?

The GST is a broad-based consumption tax of 10%. It applies to most goods and services that are consumed in Australia, regardless of their origin.

An import tariff – sometimes called an import duty – is imposed exclusively on imported goods as a condition of market access.

Tariffs are not imposed on domestically produced goods at all. This is the main point of difference with a domestic consumption tax. The GST applies equally to imported and domestically produced goods, adhering to long-agreed international trade rules.

It remains unclear how the Trump administration intends to implement a tariff that is equivalent to the 10% GST. In effect, this becomes a tax…

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