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Well, that didn’t mean. Believe in the statement you want: After exchanging hot rhetoric and mutual threats of trade sanctions on social media yesterday, either Colombian President Gustav Petro refuses to allow military deportation flights. Or Donald Trump, blinking, said that the removal process allowed to move forward. More human style. Given the relative size of their economies (a Instant Analysis The Kail Institute of Trump’s threatening 25 % tariff clearly hit 0.4-0.6 % on the annual Columbia GDP) is likely to have a strong possibility that Petro has the results of working on Didn’t think about. It may have found the dollar -based financial system more powerful than its opponent’s pen. Poetic opposition In all places, Elon Musk’s X on social media platform. On the other hand, after Trump’s threats, the American stock future fell, which may be worth some reflection for all those who are confidently telling me that the president will never do anything to weaken the share prices. –
It is also fully possible that they both feel the result. Petro got the clash that he wanted to have the a theater to remove the handcuffs without just denying them, as Louise Anasu Lola da Silva did in Brazil. Trump undoubtedly believes that his consent to reach a heavy weapon in terms of tariffs and financial sanctions has worked, and he will do so again. Is this the end of this particular chapter of the story? What will happen to the threatening taxes imposed on Mexico, Canada and China on Friday? So far your screenwriter William Goldman (of whom I have been thinking about taking around the cardboard cutout): No one knows anything.
In spite of the mantra, I asked you all to guess what Trump would do first after taking office, and I would report it below. Today’s important thing is how taxes and trade wars combine and create a new conflict. In response to readers’ demands, I also see Trump’s External Revenue Service project. Charted Waters Bitcoin. An idea on anything: alan.beatttie@ft.com.
Vat
It seems that we were not watching the wide field of fire while trying to estimate the opening Salvos. On the first day of Trump’s presidency, the surprising thing was that the threat of imposing a tax on foreign corporations and citizens in the United States was in return for which they describe as unfair tax abroad, as well as the OECD agreement. Some more expected decision to withdraw from. Minimum corporate tax
The method that Trump chose, the 90 -year -old supply of tax code was unexpected. But the recent history of the United States on foreign companies abroad has a strong history of the United States. In the past, it has been suffering from trade disputes and can do so again, depending on how Trump attacks.
Given the number of Tech Brothers on their administration, it is not surprising that Trump is repeating his first -term aggression on digital services (DSTS), which has been introduced by several European countries. But since Before your first election In 2016, he is also crying about value -added tax countries. Export on VAT, so the argument is that, by charging US exporters in the foreign market, work as a tariff while foreign companies are not charged in the United States, which does not have VAT.
Some economists buy this argument.But Trump’s VAT madness enters a complaint on the subject between some Washington’s business lawyers.
In the 1980s, the United States introduced a tax provision, Foreign Sales Corporation to correct the alleged VAT damage. The European Union launched a WTO cases against it and its linked action in 1997. After about a decade. Long legalization And complaints about compliance, Brussels won.
Capital Hill had a lot of disgusting about the US tax sovereign right, as endless “ZeroWTO orders against US anti -dumping procedures And thus the WTO’s dispute resentment has added another new eye to Washington’s embroidery, which has gradually separated the United States.
Okay, so. What are Trump going to do about this and what can the European Union (basic possible target, of course for digital tax)? If Trump uses trade or investment restrictions to punish his DSTS, the EU choice is clear and things can be spicy very soon. As interested readers will know, EU created an “anti -oppression tool” (ACI) because of Trump’s previous threats on DSTS. The ACI provides the European Union to take a wide range of retaliation against foreign governments that use trade tools to try to force the EU or its governments to change the policy – in this case DSTS To kill
ACI has now been on books since 2023 and has not been used. What better Casus Belli Returned the original provocation again? The only thing is to ensure that enough members are on the board, as they have made a big claim about the ACI deployment, and Trump will undoubtedly try to bully or bribe them.
On the other hand, if Trump continues to use purely tax tools to punish the European Union for DSTS, it may be difficult to respond. Power on tax is still mainly with EU member states, not central. It is believed that the ACI has to be used only against trade and investment measures. If Trump manages to discipline himself to meet DSTS (and vats) for taxes, he can put the EU in a difficult place, which is unable to retaliate collectively. Then, accuracy and self -discipline, as Gustavo Petro can now tell you, are not exactly the trait for which Trump is famous.
Trump’s hope is external.
Another strange plan for Trump is to begin collecting tariff revenue through a new external revenue service, which is part of his insistence that foreign exporters pay taxes on imports to the United States. At least one reader has asked me if that means, so I thought as a service. What is more useful is that I also went to one of the great reservoirs of the world of customs knowledge, Anna Jarzooska, founder of Consultancy Trade and borders..
Decision: “No”. I am sure that many of you already know this, but companies sending goods across the borders usually hire a registered customs broker to take all formal actions, including duty payment. For small consignments it can be a carrier like FedEx, a service offered by a specialist company or a large cargo carriers like MAersk. The importing company usually pays the broker that transfers money to customs authorities, customs and border protection in the US case.
As long as Trump is going to try an impossible scheme, receiving a foreign exporter tax in his country before sending goods, the system cannot really be changed. Jerzewska says: “It is not clear what any external revenue service will do, but what he will not do is to collect the tariff altogether. The tariffs are received from the importers, and it continues. And as far as I am concerned, it is.
Hopefully someone can please Trump with a plan to do something for the show. He can trim part of CBP and call it the External Revenue Service if he wants, perhaps his officers can fit into beautiful dresses with silver belt boxes in the form of a dollar mark. Nevertheless, Italian Guardia The Finanza, a Military Tax Police Force, wears customs duty with its other works. Scary gray uniform Complete with formal swords and zip in impressive heavy duty. Patrol boats. Collecting taxes in Italy is traditionally there is no work for unconscious hearts. Someone found Trump a brochure.
Of course, the question will not matter who in fact affords the cost of import tax. The increase in revenue can be absorbed by a foreign exporter who reduces its prices to keep the after -tax import price uniform, or a company within the US economy more of import input on its margin. The price may be affected. Or it can be conveyed to the final user. Evidence from the first Trump administration is that it was a combination of the second and third. Rebelling the current collection mechanism will not change.
My readers know things.
I asked you a few weeks ago what would be President Trump’s first trading move. “Cancel Off -Shore Drilling ban, even if he had to break the law” was at that place – Trump issued an executive order for this effect on the first day – assuming that we as a trading action Count. The “announcement of the National Economic Emergency” was the most advanced proposal. Not enough now, but I guess if he imposes tariffs on someone like Colombia using the International Economic Emergency Powers Act (IEEPA), it will be fulfilled. Obviously, tariffs on Mexico and Canada were another popular estimate. But in the latter, we have to wait until the last date of February 1 to see if this happens.
Charted water
It seems that the crypto currency fans in the White House are good for BitCoin’s business.
Trade links
FT offers a major overview of Trump’s global economic war.
The European Union “By Europe” is considering introducing domestic purchase rules. It will be a French victory, which has taken this idea for decades.
My FT colleague Martin Sandbo says the European Union should understand the trade and economic opportunities that are opening up with Trump’s policies.
Most Fred Nation Newsletter’s Sam Lo He does his best to explain bravely. The Customs Union is not the Customs Union, whether or not the PAN-Uru-Meditarian can accept the European Union’s offer to join the priority principles, which can accept the European Union’s involvement. In addition, for those who maintain Britain’s policy turning and turning, the government is now now Not in the right Finally a full trade agreement with the United States.
If your idea of entertainment is a minor competition with other economists and financial experts – and let’s face it, if it’s not, I’m not sure what you’re doing here – so FTK Alphabet holds Washington’s opening leg. Legendary Pub Quiz on February 6. Details here.
Is modified by trade secrets Jonathan Mills
