As the political climate in America begins to heat up with Donald Trump gearing up for the 2024 re-election, the former president’s stance on international trade is again coming under scrutiny.
This time, the focus is on India, where Trump has threatened to impose a reciprocal tax, mirroring the issue of high tax on certain American products during his first term.
Trump’s Tax Plans
During his initial term as president, Trump labeled India a “tariff king”, targeting the country’s high tax rate on certain American products, notably the iconic Harley-Davidson motorcycles.
Keen to address this imbalance, Trump proposes a matching reciprocal tax, whereby if India increases its tariff on American goods, the U.S. will do the same for Indian products entering their market.
Trump’s stance is in contradiction of certain sections of his party and a deviation from longtime U.S.’ commitment to free trade.
Criticizing the existing scenario, Trump once argued, “If India is charging us 200%, and we’re charging them nothing for products, can we charge them 100%? No, sir, that’s not free trade. Can we charge them 50%? No, sir. Twenty-five, ten, anything? No. I said, what the hell is wrong? There’s something wrong.”
India and the Reciprocal Tax: A Potential Setback
If implemented, Trump’s proposed reciprocal tax could pose a significant challenge for India, which enjoys a robust trade relationship with the U.S.
Moreover, in the global arena, such a stance might set a bad precedent, potentially disrupting the delicate balance of international trade relations.
As Trump’s 2024 re-election bid gains momentum, his proposed reciprocal tax on India could play a huge role in shaping international trade policies and could influence the future of Indo-US economic relations.
Only time will tell whether this forms a significant part of his campaign, or it’s simply a threat to level the multinational trade landscape.
