For years, those of us working on tax policy have pushed back against international efforts to “harmonize” taxes. Despite its pleasant name, tax harmonization really means other countries using international bureaucracies to force higher tax rates on lower-tax nations. 

Sadly, Democrats in the U.S. have supported this agenda. Until recently, former Treasury Secretary Janet Yellen was leading the charge through initiatives like the OECD’s Base Erosion and Profit Shifting (BEPS) plan and the push for a global minimum corporate tax. In supporting the OECD and the global minimum tax scheme, she sided with high-tax governments in their quest to stifle tax competition and drive corporate taxes higher — especially for American companies. 

This is why I was so glad when President Trump recommended pulling out of the OECD global tax deal on Day One. We should oppose these harmonization efforts and cheer loudly that the U.S. has fewer taxes than other nations, is more welcoming to foreign investors and companies, and to the competition and dynamism it has created here.

But this is also why I find the president’s reciprocal tariffs imposed on countries that have VATs so troubling. As I explained yesterday, VATs are not a tool for discriminating against American companies. Yet, by demanding that VAT countries change their tax systems or face tariffs, the president is doing exactly what Yellen and the OECD have long wanted — raising taxes on Americans.

Tariffs are import taxes, most imports are inputs for U.S. manufacturers, which means this policy not only raises taxes in the U.S. on consumers but also increases production costs for American businesses. This is just another form of tax harmonization — except here, the lower-tax country (America) is imposing a tax on itself in response to other countries imposing higher taxes on themselves. It will also undermine the benefits of tax competition that withdrawal from the OECD tax cartel was meant to achieve.

I am sorry, but this is wrong.