What effect does domestic tax policy have on international trade, and is it a bigger or smaller factor than tariffs?
For instance, if you have very high taxes on things required for production (e.g. wages, etc.) and low taxes on consumption (e.g. sales tax, etc.) then it seems to make sense to try to produce elsewhere and import even if there is no comparative advantage and you have to pay a tariff. Does that explain the U.S. trade deficit at all?
What effect does domestic tax policy have on international trade, and is it a bigger or smaller factor than tariffs?
For instance, if you have very high taxes on things required for production (e.g. wages, etc.) and low taxes on consumption (e.g. sales tax, etc.) then it seems to make sense to try to produce elsewhere and import even if there is no comparative advantage and you have to pay a tariff. Does that explain the U.S. trade deficit at all?