CNN – Donald Trump says Mexico isn’t playing fair on trade.He argues that Mexico sets a trade barrier on U.S. companies, but the same penalty isn’t applied to Mexican companies that sell in America.
His critics believe his latest comment is misleading. It is true that Mexico has a 16% value-added tax (VAT) that American companies must pay in Mexico. It’s also true that Mexican companies don’t pay a VAT tax in the United States.
However, Mexican companies do pay the same VAT tax in Mexico that U.S. companies pay. Trade experts say the VAT tax isn’t a trade barrier, or tariff, because local companies are paying the same tax in their home country.