Trump slams India over Harley-Davidson import tariffs, threatens ‘reciprocal tax’
Imported motorcycles from high-end brands such as Harley-Davidson and Triumph are set to get cheaper in India with the reduction in the tariffs.Updated: Feb 14, 2018, 23:27 IST
President Donald Trump has again cited the tariff imposed by India on Harley-Davidson motorcycles as an example of “unfair” trade practices that the United States must fight with “reciprocal taxes”, since America does not have a levy on Indian motorcycle imports.
Trump has long contended that the Indian tariff on Harley-Davidson is prohibitively high and severely disadvantages the firm against the competition. He first mentioned it in his maiden address to a joint sitting of the US Congress in February 2017, just weeks after taking office, although he didn’t name India at the time.
He has been less coy since then.
“We pay a tremendous tax to get into their countries — motorcycles, Harley-Davidson, it goes into a certain country. I won’t mention the fact that it happens to be India, in this case,” Trump said amid laughter during a discussion on trade with US lawmakers at the White House on Tuesday.
Trump went on to mention a “great gentleman”, whom the president did not name who had called him and said, “‘We have just reduced the tariff on motorcycles, reduced it down to 50% — 5-0 — from 75, and even 100%.”
This was an apparent reference to Trump’s phone conversation with Indian Prime Minister Narendra Modi on February 8, when the two leaders had discussed the political turmoil in the Maldives and the situation in Afghanistan.
On February 12, the Central Board of Excise and Customs issued a notification that slashed customs duties on imported luxury motorcycles of high-end brands, including Harley-Davidson and Triumph Motorcycles UK, to 50%. Earlier, import of motorcycles with engine capacity of 800cc or less attracted 60% duty, while those over 800cc attracted 75% duty.
Trump added, coming to the nub of his argument, that while Harley-Davidson pays that kind of tax, Indian motorcycle exporters pay nothing: “And yet they (Indian companies) sell thousands and thousands of motorcycles, which a lot of people don’t know, from India into the United States. You know what our tax is? Nothing.”
Harley-Davidson India has an annual sale of 3,700 units, according to reports, but Trump’s claims that Indian motorcycles sell by the “thousands and thousands” in the US was called an “exaggeration perhaps”, by India-US trade watchers. The US is not among major importers of Indian motorcycles.
India did indeed have a 100% tariff on motorcycles larger than 800cc, but the rate dropped to 75% and 50% for certain categories of big bikes. There is indeed 0% duty on large Indian motorcycles coming into the US. That for Trump is a case of “unfair” trade.
The White House conversation between Trump and the lawmakers was dominated by talk of unfair trade practices by China and other countries, including close allies in Asia such as South Korea and Japan and Canada.
Trump has also complained about countries that have a trade surplus with America, with China in the lead by a wide margin, and India lower below. He has ordered an investigation of these trade relations for unfair trade practices, and has already announced certain actions in some cases.
He has been speaking forcefully of reciprocal taxes. The Harley-Davidson case, he said, seemed like one. “So I say we should have reciprocal taxes for a case like that. I’m not blaming India. I think it’s great that they can get away with it. I don’t know why people allowed them to get away with it.”
He added: “But there’s an example that’s very unfair. And I think we should have a reciprocal tax.”