Former US president Donald Trump, who is seeking a second term, has once again raised the issue of high taxes by India on certain American products, in particular the iconic Harley-Davidson motorcycles, and has threatened to slap reciprocal tax if voted to power in the 2024 presidential elections.
During his first term as the US president, Trump described India as a “tariff king” and in May 2019, terminated India’s preferential market access — Generalised System of Preferences (GSP) — to the US alleging India has not given it“equitable and reasonable access to its markets.”
In an interview with Larry Kudlow of Fox Business News, Trump came down heavily on India’s tax rates, which he alleged were quite high. “The other thing I want to have is a matching tax where, if India charges us – India is very big with tariffs. I mean, I saw it with Harley-Davidson. I was saying, how do you do in a place like India? Oh, no good sir. Why? They have 100% and 150% and 200% tariffs”, said the former president.
“So, I said, so they can sell their Indian motorbike. They actually make a bike, an Indian motorbike. They can sell that into our country with no tax, no tariff, but when you make a Harley, when you send it over there –because they were doing no business. I said, how come you don’t do business with India? The tariff is so high that nobody wants it. But what they want us to do is, they want us to go over and build a plant, and then you have no tariff”, Trump said.
“If India is charging us too, so what I want to have is a –call it retribution. You could call it whatever you want. If they are charging us, we charge them Trump said in response to a question.
A reciprocal tax is charged on an import from another country that charges the US a similar amount to export an American product into its market. It effectively functions as a tariff.
Reciprocal tax agreements exist between states in the United States as well, allowing citizens of one state to work in another without having income taxes withheld in the state where they work. The money they generate in their working state is taxed according to the tax rules of the state in which they live.
Although Trump reportedly shared a bonhomie with Indian Prime Minister Narendra Modi, who became the first Indian premier to ask the American Indians to vote for Trump during an event held in 2019 and welcomed the former US president during his tour to Gujarat and New Delhi, his administration remained hostile to India’s trading interests due to alleged hyper-protective policies.
In a move to counter the Trump-era diktat that terminated India’s GSP access to the US market, New Delhi had also reciprocated by hiking tariffs on several items.
Currently, Trump is facing a series of court cases and indictments. He is also leading the Republican presidential primaries and accounts for more than half of the GOP votes according to major national polls. However, he has officially announced his decision to skip the upcoming Republican primary debate, the first of the 2024 cycle.
