As Krugman explains, Trump's comment about Mexico's VAT was totally ignorant.

[DanTex]

With the whole "Trump won the trade part of the debate" talking point going around, apparently the media hasn't yet figured out that a VAT is not a tariff, and has no protective effect at all on trade, since it applies to both domestically produced goods as well as imports.

Gah. A VAT is basically a sales tax. It is levied on both domestic and imported goods, so that it doesn’t protect against imports — which is why it’s allowed under international trade rules, and not considered a protectionist trade policy. I get that Trump is not an economist — hoo boy, is he not an economist — but this is one of his signature issues, so you might have expected him to learn a few facts.

More broadly, Trump’s whole view on trade is that other people are taking advantage of us — that it’s all about dominance, and that we’re weak. And even if you think we’ve pushed globalization too far, even if you are worried about the effects of trade on income distribution, that’s just a foolish way to think about the problem.

So don’t score Trump as somehow winning on trade. Yes, he blustered more confidently on that subject than on anything else. But he was talking absolute garbage even there.

http://krugman.blogs.nytimes.com/

[tonyt53]

1. We do some business internationally. That VAT really is like a sales tax and paid by the purchaser

[Justice]

2. Krugmans point is that Mexican residents pay VAT on domestic AND imported products

So applying VAT to our imported products into Mexico is not unfair.

Also, if we start applying a tax to products imported from Mexico into the US guess who is going to be paying that tax? The purchaser -- us. Do you think companies will suffer at all - no - the tax will not be assessed against them.