 "What tariffs is Trump imposing on India? Which are the other countries he is targeting?")
US President-elect Donald Trump has threatened to impose a ‘reciprocal tax’ on Indian goods.
“Reciprocal. If they tax us, we tax them the same amount. They tax us. We tax them. And they tax us. Almost in all cases, they’re taxing us, and we haven’t been taxing them,” Trump said.
Trump made the remarks at his Mar-a-Lago resort in Florida.
He was responding to a question on a potential trade agreement with China.
But what is a tariff? And what has Trump planned for each country?
Let’s take a closer look:
What is a tariff?
As per Investopedia, a tariff is a tax levied by a country on imported goods.
It is paid at the border.
A tariff is a way governments can increase their collection.
However, it is also a tool of protectionism – because it tries to safeguard domestic industry by increasing the price of foreign goods. The theory goes that tariffs would encourage consumers to buy cheaper home-made goods than more expensive foreign ones.
Tariffs are an extremely controversial subject.
The debate about whether they are good or bad continues to this day.
While Trump has called tariffs a ‘beautiful thing’ and campaigned on vowing to enforce them against China and Mexico, it remains unclear If he actually understands the concept.
For example, Trump has repeatedly claimed that foreign countries pay tariffs.
But this is not so.
In fact, it is American companies that pay tariffs on goods they have imported – who naturally pass the added expense on to the consumer.
Some Trump also don’t seem to understand the concept of a tariff.
After the US election the Google search for ‘what is a tariff’ saw a massive spike.
Which makes one wonder if they actually understood what they were voting for.
Trump’s plan for India
Trump singled out India as among the nations that impose high tariffs on certain US products.
Trump has vowed to impose 100 per cent and 200 per cent tariff on goods from India.
“The word reciprocal is important because if somebody charges us — India, we don’t have to talk about our own — if India charges us 100 per cent, do we charge them nothing for the same? You know, they send in a bicycle and we send them a bicycle. They charge us 100 and 200. India charges a lot. Brazil charges a lot. If they want to charge us, that’s fine, but we’re going to charge them the same thing,” Trump said.
As per The Times of India, Trump, speaking about India and tariffs at a rally before his election, said, “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 brought it together. He’s done a great job. But they probably charge as much,”
Trump previously dubbed India a “very big abuser” of tariffs.
Trump, speaking in Flint, Michigan, in September, said, “So when India, which is a very big abuser… These people are the sharpest people. They’re not a little bit backwards… You know the expression, they’re at the top of their game, and they use it against us. But India is very tough.”
Trump in 2019 called India a “tariff king”.
“I got a call from Prime Minister Modi of India. They are one of the highest-taxing nations in the world. They taxed us 100 per cent… They charge us 100 per cent tariffs on goods. So they send a motorcycle – and they make a lot of them – Indian cycles. They send them to our country, we charge them nothing. We send a Harley Davidson to India and they charge us 100 per cent.”
Trump during his first term also removed New Delhi from the US’ preferential trade programme.
This scheme known as the Generalised System of Preferences, allows developing countries greater access to the US market and lowers US duties on their exports.
As per The Times of India, Trump also imposed higher tariffs on Indian steel and aluminium.
That prompted New Delhi to impose duties on almonds and apples from the US.
Experts think this scenario could repeat again.
Ajay Srivastava of the Global Trade Research Initiative told the newspaper that Indian automobiles, textiles, and pharmaceuticals could be targeted.
However, others say India could benefit if Trump keeps his attention on China – particularly if it scales production in textiles and manufacturing.
The newspaper quoted a Shriram Mutual Fund analysis as saying that New Delhi could profit from any troubles resulting from his proposed tariffs.
The report stated that Trump levying tariffs on China, Mexico, and Canada could ‘redirect trade flows and create opportunities for India’.
The tariffs could also disturb existing trade patterns – thus allowing Indian exporters to get admission to these markets.
Trump’s plan for China
Trump has vowed to implement higher levies on imports from China.
Tariffs on goods imported from China are currently at an average of two per cent, as per CNN.
Trump has said he could increase it to as much as 60 per cent.
Trump has also vowed for an additional 10 per cent tariff on China until it stops sending illegal drugs into the United States.
“I have had many talks with China about the massive amounts of drugs, in particular fentanyl, being sent into the United States – but to no avail,” Trump wrote on Truth Social.
China has responded by telling the US “no one will win a trade war.”
Chinese Embassy spokesperson Liu Pengyu said his country has been in communication with the US about counternarcotics operations and that “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
“About the issue of US tariffs on China, China believes that China-US economic and trade cooperation is mutually beneficial in nature. No one will win a trade war or a tariff war,” Liu said in a statement.
Trump’s plan for Mexico and Canada
As per Al Jazeera, Trump has vowed a 25 per cent tariff on all imports from Mexico and Canada.
Trump earlier during the campaign said he could levy a 1,000 per cent or higher on tariff on cars imported from Mexico.
Trump has attacked both countries for allowing drugs and illegal immigrants to cross the US’ border.
“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump wrote on Truth Social.
“It is time for them to pay a very big price!”
Mexico’s President Claudia Sheinbaum has warned that such a move would result in inflation and job losses “until we put our common businesses at risk.”
The Guardian quoted Mexico’s economy minister Marcelo Ebrard as saying prior to the US election that they have no choice but to retaliate.
“If you put 25% tariffs on me, I have to react with tariffs,” he said. “Structurally, we have the conditions to play in Mexico’s favour.”
Canadian Prime Minister Justin Trudeau has been equanimous.
“We talked about some of the challenges that we can work on together. It was a good call,” Trudeau was quoted as saying by Al Jazeera. “This is a relationship that we know takes a certain amount of working on, and that’s what we’ll do.”
But Ontario Premier Doug Ford has been far more blunt.
Ford said the tariffs would be “devastating to workers and jobs in both the US and Canada”.
“The federal government needs to take the situation at our border seriously. We need a Team Canada approach and response – and we need it now. Prime Minister Trudeau must call an urgent meeting with all premiers,” Ford wrote on X.
As per Al Jazeera, China, Mexico and Canada are the US’s three biggest trading partners.
Taken together, as of 2022, they comprised $830 billion of US exports and $1.43 trillion of US imports, according to the Office of the US Trade Representative.
The Guardian quoted economists as saying that Trump’s tariffs could increase the yearly cost to US households between $1,900 (Rs 1.6 lakh) to $7,600 (Rs 6.5 lakh).
It could result in a hike in inflation of 1.4 per cent to 5.1 per cent.
With inputs from agencies
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