It was a brisk autumn morning when Peter Navarro, Trump’s trade counselor, made another fiery appearance on Fox News. With his usual fervor, he laid out a case that had become a hallmark of the administration’s economic rhetoric: the so-called injustice of value-added taxes (VAT). The argument was simple yet powerful—foreign nations, particularly in Europe, were using VAT as a weapon against American industries. It was, Navarro claimed, a system designed to punish American goods while giving unfair advantages to foreign competitors.
This assertion, repeated by trade officials like Robert Lighthizer and echoed by Stephen Miller, found an eager audience among those who believed America had been played for a fool in the global marketplace. But was this really the case? Or was this yet another example of political theater, designed to mask a more insidious agenda?
The Manufactured Crisis
The Trump administration’s critique of VAT was built on a blend of partial truths and outright misdirection. In a 2023 book, No Trade is Free, Lighthizer outlined how VAT allegedly distorted global trade. “A machine that an American company could sell at home for $100 would sell for $125 in France because of VAT,” he argued. “Meanwhile, a French company selling the same machine in the U.S. could price it at $75 due to VAT rebates.”
At first glance, this logic seemed compelling. But closer scrutiny revealed a different reality. VAT is not a tariff—it is a domestic consumption tax applied equally to both foreign and domestic goods. The claim that VAT penalized American businesses ignored a fundamental fact: every product sold within a VAT-imposing country, whether imported or domestically produced, was taxed the same way.
Take the case of automobiles. In Germany, an imported American Ford F-150 faced a 10% EU import duty and a 19% VAT, raising its price considerably. However, a German BMW sold in Germany also carried the 19% VAT—it was not some hidden punishment for American goods. The difference in price resulted largely from import duties and emissions-based taxes, not VAT discrimination.
On the flip side, a BMW imported into the U.S. was subject to a much lower 2.5% tariff. While additional shipping and compliance costs could raise the final price, the taxation structure was vastly different from what the administration claimed. American vehicles sold domestically avoided import duties altogether, keeping their prices more competitive within the U.S.
The Real Motive: Economic Nationalism and Political Strategy
If VAT was not the villain it was made out to be, then why was the Trump administration fixated on it? The answer lay not in economics, but in politics—more specifically, the doctrine of economic nationalism that underpinned much of the administration’s trade policy.
Trump’s trade team, guided by figures like Miller, Navarro, and Lighthizer, was executing a broader strategy aligned with Project 2025, a policy blueprint crafted by the Heritage Foundation. Under the guise of restoring economic fairness, this initiative sought to reshape America’s trade relationships in a way that favored protectionism, not open competition.
By portraying VAT as a foreign scheme to undercut American industry, the administration could justify aggressive retaliatory trade policies. More importantly, it could stoke economic grievances among Trump’s working-class base, reinforcing the narrative that global elites had sabotaged American prosperity.
This strategy also mirrored Trump’s approach to governance—one built on manufacturing crises and then weaponizing them for political gain. By flooding the media with alarmist rhetoric about VAT, his administration ensured that few Americans would look beyond the headlines. The goal was not economic truth, but political loyalty.
Selling the Illusion of Prosperity
Trump’s campaign rhetoric continued to promise a new golden age:
“We will begin a new era of soaring incomes!”
“Millions of new jobs, a booming middle class!”
“We are going to boom like we have never boomed before!”
Yet, these proclamations clashed starkly with economic realities. The very policies being framed as pro-worker often had long-term consequences that would hurt American consumers and businesses. If Trump’s trade team succeeded in labeling VAT as an economic adversary, they could justify further protectionist measures—potentially sparking trade wars that would raise costs for American buyers while constraining U.S. exporters.
What Made America Great?
History provided a counterpoint to Trump’s narrative. America’s true economic peak had come not through isolationism, but through global engagement. The post-World War II era, from 1945 to 1970, saw the U.S. emerge as an industrial and technological powerhouse, with massive investments in infrastructure, a booming middle class, and a thriving auto industry. The America of that time was not built on economic nationalism, but on strategic partnerships, open markets, and innovation.
Trump’s economic vision, by contrast, relied on short-term gains and the politics of spectacle. His 1987 book, The Art of the Deal, painted him as a master negotiator who thrived on bold moves and aggressive bargaining. In reality, his presidency revealed the limitations of that approach in governance. Unlike business deals, politics required coalition-building and long-term planning—areas where his administration struggled.
His approach to VAT was no different. Instead of crafting a trade policy rooted in economic realities, his administration sought to engineer a crisis, exploit it for political advantage, and hope that voters would not scrutinize the details.
The Apprentice Presidency
At the heart of Trump’s governance style was a simple principle: keep the audience engaged. His presidency functioned like a reality show, complete with daily controversies, dramatic declarations, and perpetual conflict. As one observer put it, Washington had become The Apprentice on steroids—Trump’s trade advisors throwing proverbial grenades, waiting to see which ones exploded.
Meanwhile, conservative media played the role of court jesters, amplifying every misleading claim about VAT without offering meaningful analysis. The political spectacle ensured that Americans remained fixated on the drama rather than the economic realities unfolding beneath it.
The Wake-Up Call
Despite the relentless propaganda, cracks in the narrative were beginning to appear. The average American voter—while susceptible to economic nationalism—was also pragmatic. As tariffs led to higher consumer prices, as businesses faced supply chain disruptions, and as promised job booms failed to materialize, a slow realization was taking shape.
“This is not the product I bought.”
The manufactured outrage over VAT was just another episode in a broader campaign of misinformation. As Trump’s administration continued to promise an economic renaissance while presiding over stagnation and instability, the gap between rhetoric and reality widened.
Conclusion: A Strategy of Deception
The Trump administration’s crusade against VAT was never about economic fairness. It was about leveraging trade policy for political gain, exploiting public misunderstandings to justify protectionism, and using manufactured outrage to distract from deeper governance failures.
The broader lesson was clear: economic policy should be driven by facts, not political theater. And as Americans began to feel the effects of misguided trade wars and isolationist policies, the true cost of economic nationalism was becoming increasingly difficult to ignore.
In the end, the real question was not whether VAT was fair or unfair. It was whether Americans would continue to buy into the illusion being sold to them—or whether they would finally demand an economic strategy rooted in reality
John Vidas --- March 2025