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Trump Wrong on Mexico’s VAT

Trump Wrong on Mexico’s VAT

President Donald Trump wrongly said that “nobody from this country knew” about Mexico’s value-added tax until after NAFTA was signed. A deputy U.S. trade representative at the time NAFTA was put in place said: “US policymakers, embassy officials and tax authorities were fully aware of Mexico’s VAT system.”

The president also claimed that the VAT tax put the U.S. “16 points behind, before we even started.” The former trade representative, as well as several economists and tax experts, told us the VAT is not a trade barrier, as it is charged on goods imported into Mexico as well as on products made and sold within Mexico.

Trump has repeatedly claimed as president, and as a candidate , that he views Mexico’s VAT tax as a “hidden tax” that puts U.S. exporters at a disadvantage.

In his Sept. 26 press conference at the United Nations, Trump reiterated that claim, and added that NAFTA negotiators in the early 1990s were duped.

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“NAFTA was a defective deal the day it was signed. You know why? Because they had a VAT tax of 17 percent and nobody from this country knew that,” Trump said. “And by the time they found out, which was about a week later, nobody went and changed it. So you went many years and they never changed it. There was a VAT tax that Mexico got. So we were 17 or 16 points behind, before we even started. NAFTA was a horrible thing.”

A value-added tax or VAT is “a consumption tax placed on […]