American products, if sold in Mexico, are subject to an 18 percent VAT tax, according to Donald Trump. But this NAFTA 18 percent tax does not apply to Mexican products sold in the United States. The “fact checkers” seem to be ignoring Trump’s claim about the unfair NAFTA tax.
Thus reads the description for my latest video, “Unfair NAFTA Tax”, published to YouTube on September 29, 2016. The clip, which clocks in at 10 minutes and 2 seconds, can hopefully be viewed at the top of today’s blog entry.
Where I live locally, dish detergent has a 9 percent “luxury tax.” At the grocery checkout, food is taxed at 1 percent but the “luxury item” of dish detergent is taxed at 9 percent. Suppose the “luxury tax” was doubled to 18 percent. That is what Donald Trump said, in Monday’s presidential debate, American products are taxed at in Mexico. Trump said this is part of the NAFTA (North American Free Trade Agreement) deal. Trump also said that Mexican products sold in the United States are NOT reciprocally taxed.
Suppose, in Mexico, they begin making a dish detergent product called Liquido Maravilloso. That product enters the U.S. and is not subject to any NAFTA 18 percent tax. Meanwhile, the American dish detergent being sold in Mexico IS taxed at 18 percent. One day, the American dish detergent manufacturer realizes, “If I move my factory to Mexico, I can sell my product in the United States without being hindered by the 18 percent tax.”
Where are the “fact checkers” on this? I found something on CNN/Money. “When we sell into Mexico, there’s a tax…When they sell into us, there’s no tax. It’s a defective agreement,” Trump said at the debate on Monday. Incredibly, CNN/Money says this is true! They say it is a 16 percent (not 18 percent) VAT tax and that Mexican companies IN MEXICO are subject to the same tax, but not for their products sold in the United States. 
The nuances are tricky in the CNN/Money report. They split hairs about the situation. But Donald Trump is shown to be essentially correct about this unfair tax situation, although it may not be part of NAFTA. Basically, Mexican companies do not pay a VAT tax in the United States while U.S. companies DO pay a VAT tax in Mexico.
——- Sources ——-
 “Trump’s ‘incredibly misleading’ claim on Mexico”, by Tami Luhby and Patrick Gillespie. CNN/Money, September 28, 2016. http://money.cnn.com/2016/09/28/news/economy/trump-mexico-vat-tax/