At SafeSource Direct, we believe that American-made PPE should compete on a level playing field. But in the world of international trade, the rules aren’t always fair—especially when it comes to something called a value-added tax, or VAT.

It’s one of the biggest trade disadvantages most Americans have never heard of. And it’s quietly raising the cost of doing business for U.S. manufacturers like us.

What Is VAT—and Why Should You Care?

VAT, or value-added tax, is a type of consumption tax that’s charged at every step of a product’s life cycle—from raw material to retail shelf. It’s used by more than 140 countries, including every major U.S. trading partner.

Here’s how it works:

• A European glove manufacturer pays VAT on raw materials.

• They charge VAT when selling to a distributor.

• The retailer pays VAT again when selling to a hospital.

But when they export those gloves to the U.S., that tax disappears. It’s refunded at the border.

Now flip the script. When exported to Europe, American-made gloves get taxed—often 20% or more—because the U.S. doesn’t have a VAT system to refund.

So what’s the result?

Foreign manufacturers get a tax break when exporting to us. American manufacturers get taxed when exporting to them. That’s not trade—that’s a rigged game.

The Hidden Tax on American Exports

Michael Nicholson of the U.S. International Trade Administration explains that VAT systems operate as a kind of “border adjustment.” It’s meant to keep taxes neutral between domestic and imported goods. But since the U.S. doesn’t have a VAT system, we’re left out of the refund process.

This gives foreign competitors an artificial pricing edge—especially in high-VAT regions like the EU. For American PPE companies, this isn’t just a financial nuisance. It’s a barrier to global competition.
 

What This Means for PPE

• Export Penalty: VAT increases the price of U.S.-made PPE abroad, making it harder to compete internationally.

• Domestic Opportunities: Reciprocal tariffs and growing awareness of tax imbalances may shift demand toward domestic manufacturers.

• Stable Operations: SafeSource Direct’s fully domestic manufacturing model reduces exposure to foreign tax systems and ensures a steady, reliable supply for U.S. healthcare providers.
   

Looking Ahead

Policymakers continue to debate whether the U.S. should adopt a border-adjustable tax system or rely on tariffs to offset foreign VAT advantages. Regardless of the direction, SafeSource Direct will continue delivering high-quality, American-made PPE—uninterrupted and uncompromised.

Nicholson, Michael W. “Value-Added Taxes and U.S. Trade Competitiveness.” International Trade Administration, U.S. Department of Commerce, 2010, www.freit.org/WorkingPapers/Papers/TradePolicyGeneral/FREIT186.pdf.