APRIL 5, 2019
President Donald Trump has called India “one of the highest taxing nations in the world” this time, repeating, as evidence, an outdated and misleading claim that India continued to levy a steep 100% tariff on high-end Harley-Davidson motorcycles imported from the United States.
“They charge us 100% tariffs on goods. So they send a motorcycle–and they make a lot of them–Indian cycles,” Trump said at the annual spring dinner of the National Republican Congressional Committee on Tuesday.
He continued: “They send them to our country, we charge them nothing. We send a Harley Davidson to India and they charge us 100%. Not fair, okay. Not reciprocal. It’s not fair.”
He went on to refer to a phone conversation with Prime Minister Narendra Modi, but did not go into the details, which, however, he has spoken about before. “I got a call from Prime Minister (Narendra) Modi of India. They’re one of the highest taxing nations in the world. They taxed us 100%.”
President Trump has raised the issues of tariff barriers many times before, and once called India the “tariff king”. He has also threatened to retaliate with reciprocal taxes.
Trade difference between the two countries remain the chief irritant in bilateral ties, which have otherwise been on the upswing in recent years. And Trump escalated it by, first, slapping a 25% tariff on steel and 10% aluminum in March 2018, as he did with many other countries, and then, second, announcing his intention past March to end zero-tariff benefits for India under the Generalized System of Preferences (GSP) scheme that the US has run for decades to help developing countries.
Talks are on to resolve these and other outstanding trade differences, but President Trump has continued to put pressure through these public pronouncements.
But his claims about Indian import duty on Harley-Davidson motorcycles are both outdated and misleading. India had a prohibitively high import duty on these vehicles and other high-end motorcycles such as UK’s Triumph. But it has brought it down to 50%, since Trump started complaining about it.
For context, though, India doesn’t import that many of these Harleys — just 84 in 2017, worth a measly $1.17 million; compare that to the $126 billion in total bilateral trade the same year. Most Harleys sold in India are assembled locally by the company’s plant in India, an estimated 3,000 in 2017.
The Trump administration has also identified India as one of the top countries with whom the United States has an adverse balance of trade. And that matters to the US president who has routinely complained about trade deficits, as he did at the NRCC dinner as well. It’s the highest with China, at $335 billion in 2017..
US trade deficit with India is low in comparison, $27 billion in 2017. And India has been chipping away at it since, through ramped up purchases of gas, aircraft and defense equipment. New Delhi felt let down thus when the Trump administration announced its plans to terminate GSP benefits for India in March.