US President Donald Trump dropped the bombshell on Thursday even before he could begin the formal talks with Indian Prime Minister Narendra Modi.
Talking to reporters in the Oval Office with PM Modi sitting beside him, he announced the reciprocal tariffs on India.
With clear impunity, he said, “No more or no less… They charge us a tax or tariff, and we charge the same tax or tariff… nobody knows what that number is… you go to an individual country and see what they are charging us.”
Reciprocal Tariffs On US Goods
Accusing India of imposing very high tariffs, he said that it has traditionally been at the top when it comes to tariffs, although there are a few smaller countries that surpass it.
“There are a couple of smaller countries that are more but India charges tremendous tariffs. I remember when Harley Davidson couldn’t sell their motorbikes in India because in India – the tax was so high, the tariff was so high, and Harley was forced to build… But I think they built a factory in India to avoid paying the tariffs.”
The business experts and political observers were shocked both at his announcement and the way he did it.
India Slashes Tariffs On Harley Davidson
It is interesting to note that days before PM Modi left for the US visit, Finance Minister Nirmala Sitharaman reduced the tariffs on US-made motorcycles Harley Davidson.
She slashed the tariffs on heavyweight bikes with engines above 1,600cc from 50% to 30% and smaller ones from 50% to 40%.
The Indian Finance Minister also reduced tariffs on synthetic flavouring essences from 100% to 20%. Besides, duties on fish hydrolysate for aquatic feed was also slashed from 15% to 5%. India also abolished tariffs on select waste and scrap items.
Experts of international trade have pointed out that more than 75% of the US exports to India are levied between 15% and 5%.
Besides, India generally does not use non-tariff barriers on US goods.
Washington should understand that Indian products are cheaper due to other factors like manpower, power, less customs and other things.
Donald Trump raised the issue of high tariff rates on Harley Davidson way back in his first term of office when he had slammed the then 100% duty on Harleys as “unacceptable”. He made it a rallying point in his election campaign and launched a crusade against what he saw as unfair trade practices.
Donald Trump Signs Executive Order On Tariffs
Hours before PM Modi arrived in the US, President Trump signed an executive order instructing the US Trade Representative and the Commerce Secretary to propose new tariffs on a country-by-country basis.
Though the tariffs will be discussed with each country separately under this executive order, New Delhi should not expect any special treatment or relief. Donald Trump has said many times in the past that India is one of the countries with highest tariffs and unfair trade practices.
