I wonder if EU would apply tariff to services. Can you imagine Netflix suddenly cost more? How they decide where the product come from? Or if they add a Tariff to every Visa/Mastercard transaction? 
Since everyone is doom and gloom, I would ask you to take a moment and pray for the poor penguins:
Source: https://x.com/JustinWolfers/status/1907756722850005426
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There is only Bitcoin. To anything else I say kindly âNo thanksâ.
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Itâs almost 16pm and my favorite meme stock ( CALN ) is going down less than SMI.
What you are saying is that US consumers need to pay lowest for goods because of low VAT. Thatâs correct
But no one is arguing about it.
VAT impact cost of living for consumers - true
VAT is unfair to importers - not true
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Today with CHF appreciating 2.6% and VT down 2.6% is a good day for some âstrategic rebalancingâ
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Well of course I bought at the wrong moment again.
Maybe buying TQQQ now will help?
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Itâs called a digital service tax and is already partially implemented 
Ok I didnât know that. I might have seen it while shopping for VPS.
If they start hiking it we should buy stock of VPN companies. 
NOOOOOOOOOO!!!111111 
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It works differently from tariffs though, it usually targets the revenue of some entity directly.
This is because digital services often due a lot a revenue shifting, e.g. you pay money to netflix CH, and netflix CH gets charged massive amounts by the US parent company for âaccessâ to the intellectual property (so they manage to have ~0 income and not pay much or any corporate tax), digital service tax somewhat enforces that if you sell (digital) goods in a market you canât move 100% of your profit abroad.
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Yes I know the trick, but since tariff are dynamic and targeted, they can do the same and target those internal revenue shifting. Tariffs on Hollywood accounting.
I am just wondering if what we are witnessing today is start of market collapse and we should expect what happened during previous crashes and hence a bigger drawdown
US policy announcement is one of the biggest shock to global economy since Covid
At the start of the year, I was expecting that weâd ride through everything, but Trump is really starting to weigh on sentiment. Even inflation expectations are ticking up.
We could maybe see a self-fulfilling recession/stagflation.
Fully agree. This is the time to review your asset allocation and whether you can sleep well at night. Then to sleep for 18 months and see where we are. If you have gunpowder (either cash or a conservative allocation) - only use it in 12 to 18 months.
This may be over in a month but chances are that we face at least 18 months of downwards trend.
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Starting from last week, I started adding short positions to my portfolio again. I just wish Iâd kept my TSLA and TSMC shorts on.
Agree to disagree. I had sold my bike already in Spain, just did not count on costs of 300% of the value of the bike. So I just could not sell it and had to ride it back to Switzerland. There are 3 kind of taxes for importing a vehicle, the worst was the VAT which was calculated from the new value of the 16 year old bike.
And again you make the same mistake as before: you compare two companies selling in the same country. Import/Export is producing in one country and selling in the other. The company producing in the lower VAT country has a disadvantage to the company producing in the higher VAT country when both export their goods. Exactly the same difference as with tariffs. The rest you say is true but not relevant to that fact.
But it does not import, I have seen the official formula now. Quiet stupid, based on trade surplus.
Okay
So letâs take an example
Company A makes goods in Country X. VAT is 0%. Cost to make goods is 500 EUR
Company B makes the same goods in Country Y. VAT is 20%. Cost to make goods is 500 EUR
Letâs say the net price of this good is 1000 EUR in both countries. But the gross price is different
So the gross price in Country X is 1000 EUR
Gross price in Country Y is 1200 EUR (1000 EUR net plus VAT)
Customers in Country Y need to pay higher prices for these goods simply because there is a higher VAT. But customers in country Y are fine with this VAT because they like the social security and other stuff that country Y offers. Assuming everything else is equal like purchasing power, standard of living etc
However the gross price is higher but not the net price. VAT goes to government and is applied to every supplier equally
But I donât understand what is the disadvantage for company A. They can sell their goods at net price of 1000 Euro in both countries and make exactly the same profit of 500 EUR. And same is true for company B too. Can you explain?
Assuming freight is zero to keep things simple
However if we use same example and now country X introduced tariff of 20% on Country Y. This means that importer who is willing to pay net price of 1000 EUR will now need to pay 20% tariff. But they can buy from company A without tariff, so there is no need to pay a higher price for imports. This means company B either absorb all cost increase or stop selling to the importer. In this case company A makes a profit of 500 EUR but company B has profit of 300 EUR.
I think if US keeps the legal things in order and only push for local manufacturing then worry is a bit less
This means US needs to figure out a way to produce 15-20% of the imported goods and if they canât they will still need to import at higher price
For EU, they need to find more avenues to export the goods. Right now 5% of GDP is exported to USA but if they can strike deals with others and also reduce some issues in EU itself, they can try to mitigate partially. I also donât think that exports will go down to zero. So maybe exports will reduce by some percentage
We are turning in a circle. I already explained that the VAT principle only works if you can add the tax (VAT or tariff) to the end price. In my motorbike and car example I couldnât so I could not cross the tariff and VAT border.
There are many situations where a seller cannot pass the tax to the buyer, just because the buyer has a price limit. So the producer A has an advantage as if both can sell for the same price he can keep the VAT/tariff as an additional margin. That is not fair.
VAT is the most idiotic tax, not only for import/export fairness. It kills business. A cash flow tax would help, would make investments more interesting and therefor help the economy. And a business can hardly go bankrupt when having positive free cash flow.
But that was not the subject here. Lets keep it at that except you have something I did miss.
BTW: I had to pay VAT many years, decades even, and know exactly how it works.