This is John Batchel, a conversation with colleague Veronique de Rie of the Mercatus Center about the VAT, the

value-added tax. The president doesn't like value-outed tax. He says that it's the same as tariffs.

Veronique disagrees. She doesn't like the value-outed tax either, but she disagrees that it's the same as tariffs.

Here's an explanation.

The value added tax by France and not by America.

Is that the same as a tariff?

No.

More of this later.

So that's something where he really misunderstands the value added tax.

So the value added tax is a tax that is applied to, I mean, I don't like, I wish I should put

that out there.

It's a consumption tax and it's levied on the value added of a product at each side of the supply chain, right?

But what it means is basically it's a consumption tax.

So when people buy, let's say, a fridge in France that's been produced, let's say in France,

mostly in France, nothing is just produced in one country and then consume an American import into France.

They are charged with a vet. He sees it because we don't have one as somehow punishing American exports.

But of course, it's actually not the way to think about it.

Well, the only way it's unfair is if the French products were not subjected to the VAT,

but the American import was. But for whatever reason, I am certain that a lot of people have told

him, he just thinks it because we don't have a VAT,

you know, it means that our exports to France, let's say, to Europe are treated unfairly.