President Trump is mad about India’s high tariffs on America's Harley Davidson motorcycles, and he’s been talking about it all week. Experts say that may signal a continuing downturn in trade relations between the two normally friendly democracies.
On Tuesday, during a meeting with congressional leaders on trade, Trump said that “a great man from India” — presumably Prime Minister Narendra Modi, with whom he chatted by telephone Feb. 8 — recently called him to say that India was cutting its steep import tariffs on Harleys to 50 percent — “that’s 5-0,” Trump noted.
These still-high fees make India the latest in a list of nations such as China that “come into our country and rob us blind,” Trump said. Most of the 4,500 Harley Davidsons sold in India each year are actually assembled in India, which means the buyer can avoid the pricey tariffs.
“I’m not blaming India. I think it's great that they can get away with it. I don't know why people allowed them to get away with it. But there's an example that's very unfair,” Trump said, saying the United States should impose a “reciprocal tax” on other countries in return.
Trump accused India of selling “thousands of thousands of motorcycles, which a lot of people don’t know, from India into the United States. You know what our tax is? Nothing.”
Problem is, the number of motorcycles imported from India into the United States is minimal. India’s Royal Enfield brand has dealerships in the United States and sells about 1,000 of its high-end bikes a year, according to Cartoq, but “motorcycles” don’t even merit a mention in the Indian Ministry of Commerce and Industry's most recent data on exports to the United States. U.S. customs data lists about $13 million worth of bikes exported to the United States in 2016, but that number also includes mo-peds.
India recently announced that it was cutting the customs duty on imported motorcycles like Harley Davidson, Ducati and Triumph to 50 percent — from earlier charges that varies from 60 to 75 percent based on the power of the engine.
Trump's unhappiness over India's high tariffs comes at a time when trade relations between the United States and India are frosty — there's a $30 billion trade deficit — and India has taken a “dramatic protectionist turn” with its recent budget, according to a recent position paper by Richard M. Rossow of the Center for Strategic and International Studies in Washington.
India is increasing customs duties across 49 product groups, including cellphones, perfumes and makeup, and cars, a move that India’s leaders want to boost the country’s “Make in India” manufacturing plan for indigenous manufacturing, Rossow wrote.
“The scale of India’s protectionist leap is surprising and likely to elicit a strong response from the United States and other major trading partners,” Rossow predicted, with U.S. and India trade relations beginning the year with “a longer list of concerns and dim hopes for progress.”
Things are already cool.
A bilateral trade meeting between India and the United States in October degenerated into what one participant described as a “depressing” mess when the trade negotiators from the United States pressed India hard on the trade imbalance. Indian-U.S. trade relations are thorny even in the best of times, analysts say, with the United States pushing for market access and voicing concerns over intellectual property rights while India wants protections for its citizens on foreign worker visas.
But the Trump administration has been newly focused on the goods-related part of the trade deficit, pushing hard on such contentious issues as poultry and pork imports to India and price controls on medical devices.
In the end, the meeting was so unproductive the two sides could not even decide on what a joint statement would say — each side issued its own.
Sanjaya Baru, once media adviser for Indian prime minister Manmohan Singh, now the secretary general of the Federation of Indian Chambers of Commerce and Industry, said that discussions with trade staffers were similarly uncomfortable when he accompanied a group of business leaders to Washington in the fall.
“It reminded us of the early 1990s, all the rhetoric about fair trade and reciprocity,” Baru said. “It was a time when India had not opened enough yet and there was a lot of pressure. I guess some of that rhetoric is back in D.C.”
Trump's diatribe against India came during a week when he also lamented the trade deficit with China and the need to renegotiate the North American Free Trade Agreement.
Correction: An earlier version of this story's headline inaccurately referred to Harley Davidsons as Indian exports. India exports Royal Enfields. The headline has been corrected.