TIFF OVER TARIFF

Trump is talking tariffs once again. What does that mean for Indian exports?

- SURAJEET DAS GUPTA

In 2018, as the President of the United States, Donald Trump called India the "tariff king," citing the high import duties (100 per cent at that time) on Harley Davidson bikes, but also saying the Indian government was ready to reduce it.

Six years later, as the US President-elect, Trump took on India once again on the same issue. At a press conference last week, he called the country a "very big abuser" of tariffs and threatened reciprocal measures. "If they tax us, we tax them the same amount. Almost in all cases they are taxing us and we haven't been taxing them," Trump said.

His ire on tariffs is not new. It was apparent when he was President the first time. Nor are India's high tariffs a new revelation for the US.

The fundamental difference is that Trump is openly using tariffs as a weapon to make countries fall in line.

The worries about India's high tariffs have been elucidated in the National Trade Estimate Report of 2024 on "Foreign Trade Barriers," prepared under the aegis of US Trade Representative Katherine C Tai, who was nominated by outgoing US President Joe Biden and will soon be replaced by Trump nominee Jamieson Greer.

Tai's report is unambiguous--it says India has one of the highest tariffs among the major nations with an average most favoured nation (MFN) applied rate of 18.1 per cent in 2022 (latest available).

The average applied tariff rate is 14.7 per cent for non-agricultural goods and 39.6 per cent for agricultural goods.

The MFN applied rate is the tariff rate applied on imports for all trading partners who are members of the World Trade Organisation (WTO) until it has a preferential trade agreement.

The only countries that come close to India amongst the major nations, based on the report, which scrutinised 59 countries (including the European Union), are Turkey and Hong Kong.