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Trump's latest pitch to voters: Reciprocal tax against India's 'high tariffs'
Donald Trump criticized India's high tariffs, vowing to introduce a reciprocal tax if re-elected.
Former US president Donald Trump, seeking a second term, claimed that India imposes some of the highest tariff on foreign products and vowed to introduce a reciprocal tax if he wins the elections next month.
"Perhaps the most important element of my plan to make America extraordinarily wealthy again is reciprocity," Trump said while speaking to the members of the Detroit Economic Club. He accused India of being the "biggest charger" of tariffs, citing the example of import taxes on Harley Davidson bikes, which he had previously complained about during his first term in office.
But he softened the blow by heaping praise on Prime Minister Narendra Modi.
“India is a very big charger. We have a great relationship with India. I did. And especially the leader, Modi. He's a great leader. Great man. Really is a great man. He's brought it together. He's done a great job," he said.
"I mean, I think they probably charge more than, in many ways, China. But they do it with a smile. They do it... Sort of a nicer charge. They said thank you so much for purchasing from India,” he added.
The former president highlighted his past interactions with American companies like Harley-Davidson, where he learned of the challenges posed by India’s tariffs, which he cited as being as high as 150 percent.
“I said how's business? Good, good. What are the bad countries? Well, India is very tough. And they gave me some others. Why? Tariffs. I said what are they? And they said like 150 per cent, some massive amount,” Trump said.
In 2019, Trump terminated India's designation as a developing nation that allowed the South Asian country to export thousands of products to the US duty-free. New Delhi retaliated by imposing higher tariffs on several products. The US was India’s largest trading partner last year, with bilateral trade of about $127 billion.
Possible impact of Trump's ‘reciprocal tax’
Bloomberg Economics has predicted that Trump's proposed tariff hikes could marginally impact India’s economy, estimating a 0.1% decrease in GDP by 2028 if Trump follows through with a 60% tariff on Chinese goods and 20% on others. The report indicated that this decline would stem from a general slump in global trade and India’s relative lack of competitiveness.
Economists suggest that India could counteract the effects of Trump's trade barriers by increasing manufacturing subsidies and reducing average import tariffs. A combined approach of a 4% production incentive and a 1 percentage-point cut to import tariffs could yield a 0.5% increase in GDP above the baseline, according to the Bloomberg report.
Trump's praise for PM Modi
Trump's latest remarks come just days after he praised PM Modi and described him as the nicest human being”.
“Modi, India. He’s a friend of mine. He’s great. Before him, they were replacing them every year. It’s very unstable. He came over. He’s a friend of mine. But on the outside, he looks like he’s your father. He’s the nicest, but he’s a total killer,” he had said.
