NPR.
This is The Indicator From Planet Money.
I'm Paddy Hirsch.
And I'm Adrian Ma.
It's been a couple weeks
since President Trump declared a national emergency due to the trade and economic practices of America's trading partners.
Since then, we have had some whiplash.
He's adding it.
Yeah.
Yeah, Trump said he'd keep some tariffs, but he'd pause others and also crank up the tariff heat on China.
Yeah, it's been a bewildering time.
And there's one area that's still making economists and investors particularly puzzled.
The focus of the Trump administration on value-added tax, VAT or VAT for short.
Trump's order calls VAT a non-tariff barrier to trade that distorts the market.
Now, this is not what most economists think.
Most economists say that that is simply the equivalent of a sales tax, which,
just like in the U.S., everybody pays regardless of where the goods came from.
But this has not stopped the Trump administration from using VAT as a reason to slap tariffs on America's trading partners.
So on today's show, we'll examine the spat over VAT.
We'll explain what it is and why Trump isn't happy about it.