‘India has most tariffs’: Trump announces ‘eye for an eye’ reciprocal taxes

Donald Trump's remarks come ahead of his meeting with Prime Minister Narendra Modi.

Donald Trump has announced that US will soon impose "reciprocal tariffs" on trading partners, opening new fronts in his spreading global trade war. While signing the executive order, the US President said that India has more tariff than any other country. His remarks come ahead of his meeting with Prime Minister Narendra Modi.

PM Modi is expected to meet Donald Trump later on Thursday.(AP File)

Track live updates on Narendra Modi's US visit here.

"There are a couple of smaller countries that are actually more but India charges tremendous tariffs. I remember when Harley Davidson couldn't sell their motorbikes in India because of the fact that 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 in order to avoid paying the tariffs," Trump said while signing an executive order on reciprocal taxes.

"That's what people can do with us. They can build a factory here, a plant or whatever it may be here and that includes the medical, that includes cars, that includes chips and semiconductors," he added.

While signing the order, Trump said that the reciprocal taxes would apply to all countries with no exceptions. He said US allies were often "worse than our enemies" on trade, as he spoke to the press in the Oval Office about his latest move to shake up US domestic and foreign policy.

"I’ve decided for purposes of fairness that I will charge a reciprocal tariff," Trump said in the Oval Office at the proclamation signing. “It’s fair to all. No other country can complain.”

Trump's poll promise

During election campaigning, Trump had promised: "An eye for an eye, a tariff for a tariff, same exact amount."

For example, if India imposes a 25-percent tariff on US autos, Washington will have a 25-percent tariff as well on imports of autos from India, explained a Nomura report this week.

The consideration of non-tariff factors might shift this calculus.

Who would be impacted?

The politics of tariffs could easily backfire on Trump if his agenda pushes up inflation and grinds down growth, making this a high stakes wager for a president eager to declare his authority over the US economy.

The tariff increases would be customized for each country with the partial goal of starting trade new negotiations. But other nations might also feel the need to respond with their own tariff increases on American goods. As a result, Trump may need to find ways of assuring consumers and businesses that growth to counteract any uncertainty from the possible fallouts from his tariffs.

Trump acknowledged Thursday that US prices "could go up" due to tariffs, but he expressed confidence that they would ultimately ease.

Trump has announced a broad range of tariffs targeting some of the biggest US trading partners since taking office, arguing that they would help tackle unfair practices -- and in some cases using the threats to influence policy.

The president has referred to tariffs as a way to raise revenue, remedy trade imbalances and pressure countries to act on US concerns.