'Tariff king': Why Trump vows to impose a reciprocal tax on India if voted to power

As he campaigns to be re-elected as US president, Donald Trump has criticised India’s high import duties and threatened a reciprocal tax. On Monday, while discussing the issue of high taxes on certain American items in India, he specifically mentioned the iconic Harley-Davidson motorcycles and threatened to impose a reciprocal tax if he is elected to the White House in 2024. 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 United States alleging India has not given the United States equitable and reasonable access to its markets. In an interview with Larry Kudlow of Fox Business News, Trump said came down heavily on India’s tax rates, which he alleged were quite high. Let’s take a closer look at what the reciprocal tax is, and how Donald Trump is targeting India. Reciprocal tax 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. ‘India is very big with tariffs’ Donald Trump has claimed that India’s tax rates are far too high. Discussing the matter in the interview, the former president stated, “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 per cent and 150 per cent and 200 per cent tariffs,” said the former president. [caption id=“attachment_13020212” align=“alignnone” width=“640”] During his first term as the US president, Donald Trump described India as a tariff king and in May 2019. AP[/caption] “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. “They said, well, that’s not good. That’s not our deal, OK? That’s not our deal. And I came down very hard on them. But India is very big. Brazil is very big on tariffs, I mean, very, very big. We had a couple of people, like the senator from a place called Pennsylvania that I love. But this guy was just horrendous. I said, let me ask you a question. If India is charging us 200 per cent, and we’re charging them nothing for products, can we charge them 100 per cent? No, sir, that’s not free trade. Can we charge them 50 per cent? No, sir. Twenty-five, 10, anything? No. I said, what the hell is wrong? There’s something wrong. You know what I’m talking about,” he 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. The 77-year-old former president, who is facing a series of court cases and indictments, is leading the Republican presidential primaries and accounts for more than half of the GOP votes according to major national polls. With inputs from PTI