And therein lies the rub. Any goods / materials from outside the VAT zone will have VAT charged on the import. Vis—a-vis a tariff.
Example
I manufacture and sell teak wood tables in Portugal.
I buy the wood from Asia, which does not have a VAT and is outside the EU. When I import said wood, I get assessed a value to pay VAT on. This is a tariff.
I buy the stain and finish from Germany, which is inside the EU and has a VAT, through a complex paperwork system, I also pay VAT when the finish gets imported to me, but eventually I can claim that VAT paid back and it “nets out”. So I get this back. How do I get it back? I can subtract VAT paid from the VAT collected when I sell the goods.
But the actual net VAT charged is the same as if I used native materials, so the imports are at no disadvantage to native sales. So it is not a tariff.
More like VAT is a sales tax, by a different name. Regardless of the name, the buyer should pay the same amount of tax whether they buy domestic or from abroad. If VAT wasn't paid when buying from abroad, it would unfairly disadvantage domestic suppliers.
(I'm not an accountant, but as far as I know, the same VAT deductions for businesses apply whether they buy from an EU country or from a non-EU country, which your example doesn't take into account.)
Example I manufacture and sell teak wood tables in Portugal. I buy the wood from Asia, which does not have a VAT and is outside the EU. When I import said wood, I get assessed a value to pay VAT on. This is a tariff. I buy the stain and finish from Germany, which is inside the EU and has a VAT, through a complex paperwork system, I also pay VAT when the finish gets imported to me, but eventually I can claim that VAT paid back and it “nets out”. So I get this back. How do I get it back? I can subtract VAT paid from the VAT collected when I sell the goods.
Yes, VAT is a tariff, by a different name.