Trump Vows Reciprocal Tax On India, Calls Out High Tariffs Ahead Of US Elections

In the final weeks leading up to the US presidential elections, Republican nominee and former president Donald Trump has renewed his criticism of India's trade practices, pledging to introduce a "reciprocal tax" against the country if elected to office. Speaking in Detroit, Trump labelled India a "tariff king" and accused it of imposing excessively high tariffs on American goods, positioning this as a major challenge for US businesses.

During his address at the Detroit Economic Club, Trump criticised several countries, including China, Brazil, and India, for what he described as "unfair" tariff policies, arguing that these nations impose significantly higher tariffs on US imports compared to what the US charges in return. He emphasised India as the “biggest charger of all,” calling out its tariffs as particularly problematic for American companies seeking access to the Indian market.

“Perhaps the most important element of my plan to make America extraordinarily wealthy again is reciprocity,” Trump said. He explained that his administration had started the process of imposing tariffs on foreign goods but that more needed to be done. “We really don’t charge. China will charge us a 200 per cent tariff. Brazil is a big charger. The biggest charger of all is India,” he asserted.

Trump recalled his previous meetings with Harley-Davidson executives, citing their concerns over India's 150 per cent tariffs on motorcycles as a significant barrier to doing business. Harley-Davidson eventually exited the Indian market in 2020 after years of struggling to establish a foothold. “India is a very big charger. We have a great relationship with India. I did. And especially with the leader, Modi. He’s a great leader… I think they probably charge more than, in many ways, China. But they do it with a smile,” Trump added.

This rhetoric comes against the backdrop of rising average tariffs in India, which have increased from 13 per cent in 2014 to 18.1 per cent in 2022. As Trump renewed his critique, the timing is significant: the US is currently India’s largest trading partner, with bilateral trade reaching nearly USD 120 billion in FY24. Interestingly, India runs a goods trade surplus with the US, being the only major economy where India exports more than it imports.

Indian policymakers have defended the country’s tariff policies, arguing that higher protection is necessary to foster domestic manufacturing and support industrial growth. New Delhi’s production-linked incentive (PLI) schemes across 14 sectors are designed to boost local production, a strategy they argue is akin to the US’s Chips Act and Inflation Reduction Act.

Trump’s pledge to introduce reciprocal tariffs resonates with his longstanding narrative that the US is being exploited by unfair trade practices, particularly through imbalanced tariffs. His comments also come at a time when many countries, including the US, are raising protective barriers against Chinese imports, fearing job losses in domestic markets. The US itself has enacted significant tariff hikes, particularly targeting China, as part of this broader shift toward protectionism.

If re-elected, Trump’s proposed tariff policies could further strain US-India trade relations, while also signalling a potential shift in global trade dynamics, particularly as more nations look inward to protect their economies from external competition.