Washington, Feb 14 (IANS) President Donald Trump referred to Prime Minister Narendra Modi as a “significantly tougher negotiator” during discussions on tariffs. “He is much more skilled in negotiations than I am. It’s not even close,” Trump remarked at a press conference following their bilateral meeting, which prominently featured tariffs.
Trump, who announced a new approach for reciprocal tariffs earlier that day, criticized India as the “highest tariff nation in the world”. “Selling products in India is challenging due to their strong trade barriers and tariffs,” Trump noted, emphasizing the substantial trade deficit of $98.4 billion that the US faces as a core issue in his trade policies.
He indicated that the US might impose tariffs in response to those charged by India and other countries on US imports. “We are currently operating as a reciprocal nation,” he stated. “Whatever tariffs India imposes on US goods, we will impose the same.” He added, “This approach is straightforward—if you impose a charge, we will do the same. I believe this is just and fair for both the US and India.”
While presenting his plan for reciprocal tariffs earlier on Thursday, Trump did not define specific new tariffs but rather directed his appointees, Howard Lutnick for commerce secretary and Jamieson for international trade representative, to devise a detailed tariff strategy for each nation within 180 days. Post memorandum signing, Trump also addressed his ongoing grievance with India regarding Harley Davidson motorcycles.
“Harley Davidson faced challenges selling their motorcycles in India due to excessively high taxes and tariffs,” he commented. “I believe they established a factory in India to circumvent these tariffs,” he added. “This is a strategy others could use with us: if manufacturing is done locally, there are no tariffs.”
The White House’s fact sheet on reciprocal tariffs contained erroneous statements regarding India and Harley Davidson. The document claimed that India “imposes a 100% tariff on US motorcycles, compared to only a 2.4% tariff on Indian motorcycles.” However, it has been established that India previously reduced tariffs on heavier Harley Davidson bikes to 50% and recently adjusted them further down to 30%, while lowering tariffs for other models to 40% in the latest budget.
Donald Trump has issued a warning regarding reciprocal tariffs, which would result in the US imposing the same tariff rates as those levied by other countries on American exports.
Harley-Davidson currently partners with Hero MotoCorp in India, with the X 440 being their first collaboratively designed model.
US President Donald Trump has advocated for reciprocal tariffs on countries, corresponding to the rates at which they impose tariffs on American goods. During discussions with Prime Minister Narendra Modi, Trump criticized India’s high tariffs on US-manufactured Harley-Davidson motorcycles.
In his second term, Trump has reiterated the notion of reciprocal tariffs, asserting that this aligns with his vision of equitable trade practices. He previously imposed a 25% tariff on specific imports from Canada and Mexico, though that initiative was temporarily paused until the end of February. He has also targeted regions like the European Union, China, and India. “Currently, we are a reciprocal nation… Whatever tariffs India charges us, we will reciprocate, and I believe this is only fair,” he stated. “I recall when Harley Davidson struggled to sell their motorcycles in India due to steep taxes and tariffs, which led them to establish local manufacturing to circumvent these costs. Others might consider similar strategies in their dealings with us.”
While both India and the US maintain significant trade relations, Trump’s tariff threats do not single out any specific country. By promoting domestic production and leveraging his presidential campaign on the promise of creating more American jobs, Trump signals his desire for production capacities to develop or increase in the United States rather than relying heavily on imports.
What happened to Harley-Davidson in India?
Harley-Davidson entered India in 2009, launching its first dealership in 2010. Known as a premium brand in the US, Harley initially imported models such as Sportster, Dyna, VRSC, Softail, and CVO. However, as the years went by, the company began to locally assemble certain models, including the Street 500 and 750 in Bawal, Haryana.
Despite the vast two-wheeler market in India, penetrating the premium segment posed significant challenges. In September 2020, Harley-Davidson announced its exit, citing weak demand and disappointing sales figures. However, it wasn’t a complete exit; the American company partnered with Hero MotoCorp in October 2020, designing a framework for Hero to enable sales and servicing of Harley’s motorcycles. By 2023, their first joint project, the Harley-Davidson X440, launched at a price of ₹2.30 lakh (ex-showroom).
Just hours before his meeting with Prime Minister Narendra Modi, US President Donald Trump announced his strategy for broad “reciprocal tariffs” that will impact both allies and adversaries, heightening global trade tensions that experts warn could result in domestic inflation.
“To ensure fairness, I’ve decided to impose a reciprocal tariff,” Trump stated in the Oval Office. “It’s fair for everyone. No other nation can argue against it.”
In his Oval Office address, Trump reaffirmed his stance, saying that American allies often act “worse than our enemies” regarding trade issues.
The president also remarked that India imposes “enormous” tariffs, which hindered Harley Davidson’s ability to sell motorcycles in that country. “India is traditionally at the forefront when it comes to tariffs. There are a few smaller nations that charge more, but India’s tariffs are significant. I recall that Harley Davidson was unable to sell motorcycles in India due to excessively high taxes and tariffs, which forced them to establish a factory there to circumvent paying those tariffs. This approach is something others can pursue with us as well. They can set up plants or factories here, which applies to industries like healthcare, automotive, and semiconductor manufacturing,” Trump explained.
The tariffs will be specifically tailored for each trading partner, considering non-tariff factors such as value-added tax (VAT).
This announcement came just before Trump’s planned meeting with PM Modi in Washington. Analysts believe that developing markets like India and Thailand, which impose higher effective tariffs on US goods, could be significantly impacted, while countries with existing trade agreements may experience less disruption.
Peter Navarro, the president’s trade advisor, openly criticized the European Union’s VAT practices, remarking that “Major exporting nations around the globe undermine our markets with severe tariffs and even harsher non-tariff barriers.”
The United States will initially focus on those economies experiencing the largest trade deficits or exhibiting “most egregious issues,” as indicated by a White House representative.
The unnamed official suggested that the implementation of these tariffs could take “a few months, but not much longer than that.”
Trump acknowledged the likelihood of price hikes due to these tariffs but remained hopeful about future market stabilization.
Since taking office, Trump has enacted multiple tariffs targeting key trading partners, contending these actions rectify unfair practices and can drive policy changes.
The president perceives tariffs as means of generating revenue, resolving trade imbalances, and leveraging diplomacy.
The White House representative highlighted unfair trade practices and the absence of reciprocity as contributing factors to America’s ongoing trade deficit.
The memorandum he signed instructs the US Trade Representative, Secretary of Commerce, and other officials to suggest country-specific remedies.
On February 10, US President Donald Trump announced plans to impose a 25% tariff on all steel and aluminum imports, reigniting a long-running trade dispute with India. Speaking while en route to New Orleans for the Super Bowl, Trump stated that he would unveil the tariffs on Monday, which would affect imports from all nations. He emphasized, “Any steel coming into the United States is going to have a 25 percent tariff, aluminum, too.” Trump also mentioned that reciprocal tariffs would be instituted for all countries, saying, “Very simply, if they charge us, we charge them.”
The tariffs are expected to be announced within the next few days and take immediate effect. This development arrives just before Prime Minister Narendra Modi’s upcoming visit to Washington. In 2023, India exported steel valued at $4 billion and aluminum worth $1.1 billion to the US. The trade of these metals has been fraught with tension, with the US accusing India of subsidizing its exports.
During PM Modi’s previous visit to the US in 2023, the two nations agreed to resolve six disputes regarding these metals at the World Trade Organization. Nonetheless, in October, the US imposed duties of up to 39.5% on certain aluminum imports. It remains unclear how Trump’s announced 25% tariff will intersect with these existing duties.
In the final days of former President Joe Biden’s tenure in January, the US agreed to lift some additional tariffs set by Trump’s initial administration, which ranged from 10% to 25%, while establishing a monitoring mechanism for exports. In exchange, India consented to lower tariffs on apples, walnuts, and almonds. According to the US Census Bureau, India’s total exports to the US reached $87.4 billion, while imports amounted to $47.8 billion last year, resulting in a significant trade surplus for India.
Trump has been focused on reducing the US trade deficit and plans to do so through tariffs. During his initial term, he highlighted the 100% duty on Harley Davidson motorcycles as a reason for labeling India a “Tariff King.” This month, India symbolically lowered tariffs on various heavier Harley Davidson models from 50% to 30% and from 50% to 40% for other models. However, in key areas such as satellite ground equipment and specific categories of scrap and waste, India has eliminated certain duties while cutting others.
New Delhi: India has initiated an extensive analysis by sector, developing multiple scenarios to brace for a potential increase in tariffs on goods exported to the United States during the Donald Trump administration, according to various sources familiar with the situation. “Different ministries and departments are evaluating a range of scenarios in anticipation of such a move by the US and exploring possible countermeasures,” one source stated.Also Read: Trump’s stark warning to India risks significant consequences
President-elect Trump stated on Tuesday that the US would introduce reciprocal tariffs on Indian products due to the high tariffs imposed by New Delhi on American goods. Experts suggest that India might need to reassess its import duties on specific items and could offer increased market access for certain American imports to alleviate Trump’s concerns.
Previously, the US has raised concerns regarding the high import duties on Harley Davidson motorcycles, as well as limited access for medical devices, equipment, and dairy products in India.
Addressing US Concerns
Officials assert that India’s most favoured nation (MFN)-weighted average import tariff is relatively low, approximately 5-6%. While select agricultural products encounter higher tariffs, even those are significantly lower than the rates outlined by the World Trade Organization (WTO). They note that most countries, including the US, apply elevated tariffs and various non-tariff barriers on agricultural goods. For instance, dairy products, fruits and vegetables, cereals, food preparations, and oils in the US face tariffs as steep as 130-190%.
One insider mentioned that any thorough evaluation of the impact or necessary measures can only occur after the Trump administration officially takes over on January 20.
Experts suggest that New Delhi has the option to impose retaliatory tariffs or approach the WTO while advocating for a strategic response.
“It makes sense to reconsider certain products for tariff adjustments to address US concerns,” remarked one expert who preferred to remain anonymous due to the sensitive nature of the issue. While tariffs are bound by WTO commitments or linked to MFN status rather than being country-specific, there is an opinion that a measured approach could be taken when evaluating the product list traded between India and the US.
“It is unfeasible for India to implement country-specific tariffs, as that would violate the most-favoured nation (MFN) principle,” stated Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).
Tariff Review
Sahai believes that India can revisit certain tariff lines and strategize accordingly, even if it results in a slight duty loss on some products.
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Here’s a brief overview of how tariffs operate in economics.
When a company imports a good or its component from a foreign country, let’s imagine it costs $20 prior to any tariffs. The company markets that item for $30 to consumers, achieving a modest profit.
However, if the country where the company is located imposes a 50% tariff on imports from the supplier country, the cost of that good rises to $30. To maintain profitability, the company is then compelled to charge consumers $40, thus transferring the added expense onto them.
The primary intention behind tariffs is not to penalize the exporting country but to encourage domestic production, prompting companies to source locally to avoid tariff costs. Nevertheless, if local alternatives are either unavailable or similarly priced, the burden of extra costs still falls on consumers, rather than the country from which the product was imported.
Moreover, tariffs can lead to adverse effects on global commerce, instigating countries to retaliate. For instance, if the U.S. imposes tariffs on imported goods, the UK may respond by imposing tariffs on American products, including notable brands like Harley-Davidson.
As reported by Politico, this is not the first instance of the U.K. imposing tariffs on American products. The last time this occurred was during Trump’s presidency concerning American steel. “The U.K. has retaliatory tariffs on iconic U.S. goods including Harley Davidson motorbikes ready to be immediately deployed in case of a trade war with Donald Trump,” the publication notes, adding, “The British government has been strategizing how to counter potential Trump tariffs on U.K. goods, with officials briefing ministers that they can reinstate former EU measures against the U.S. without further inquiry. Following Brexit, the U.K. maintained tariffs that the EU had imposed on U.S. products as a response to Trump’s steel tariffs.”
However, all these initiatives could be rendered ineffective if Harley-Davidson bikes, already among the priciest motorcycles on the market, increase in price by 10% to 30% because of retaliatory tariffs from the UK and possibly from the EU. Picture a $30,000 motorcycle suddenly escalating to $50,000 due to these newly enforced tariffs, a situation that could unfold almost overnight.
Photo by: Harley-Davidson
Harley EICMA Announcement
“Current and former government officials told Politico that the U.K. can swiftly reintroduce these tariffs on the U.S. if Trump acts on his threats to impose 10 to 20 percent tariffs on all imports, without facing opposition from Britain’s trade regulators,” the article notes, adding, “This can proceed without the typical need for an investigation by the independent Trade Remedies Authority, as these tariffs were suspended indefinitely by the British government in 2022 rather than being fully removed.”
If you’re skeptical, Harley experienced the negative consequences of tariffs during Trump’s last presidency as well. And this issue extends beyond just the U.K. and the EU; if Asian nations decide to impose their own counter-tariffs on American goods, particularly Harley-Davidson products, the impact could be detrimental.
With plummeting demand, an aging customer base, and a lineup that seems targeted at Baby Boomers—who are no longer purchasing motorcycles at the same rates—Harley is teetering on the brink of failure. Its best strategy for attaining long-term financial health lies in penetrating markets where small-displacement bikes are prevalent. But if even their desirable small-displacement 350 and 440 motorcycles become 10% to 30% more expensive, the company may lose its competitive edge against manufacturers like CFMoto, Bajaj, QJ Motors, and other reasonably priced domestic brands.
When you factor in additional macroeconomic challenges currently affecting the entire industry—such as high interest rates, stagnant wages, increasing inventory, economic instability, and lower-than-expected demand—Harley-Davidson finds itself in a precarious position, facing a multitude of challenges.
In summary, if these tariffs take effect and other nations retaliate—which they almost certainly will—Harley-Davidson may be facing serious trouble.
