Donald Trump Once Again Brings Up ‘Reciprocal Tax’ Against India, China

United States President Donald Trump once again called for reciprocal tax against India, China and other countries. He has been mentioning the tax often of late, saying that countries are taking advantage of the United States.

He once again threatened India and China with such a tax on March 9, saying, “We’re going to be doing a reciprocal tax program at some point so that if China is going to charge us 25 per cent or if India is going to charge us 75 per cent and we charge them nothing. If they are at 50, or they are at 75 or they are at 25, we are going be at the same number. It’s called a reciprocal tax, mirror tax. So they charge us 50, we charge them 50… We are going to be doing a lot of that.”

Trump also announced increased tariff on steel and aluminum imports, imposing 25 per cent tariff on steel and 10 per cent tariff on aluminum, leading to a fall in the share prices of metal companies in India. The Indian government said on March 9 that the decision by the United States to raise import duty on steel and aluminum was discriminatory.

India responded to the increased tariffs saying that the United States and India have different commitments to the World Trade Organization (WTO) since India is a developing country while the United States is a developed nation.

“Of course, there would be some impact as India is an exporter,” commerce secretary Rita Teaotia said, according to the Economic Times. “Let’s wait and see the manner in which it is notified and then we will decide what is to be done. No country violates its WTO commitments. What the US is using is a security excuse. We have to see in what form they are able to justify and rationalize it,” she added.

The outcry against the United States’ increase in taxes has come as it outdid its WTO ceiling while other nations that have increased taxes have kept it within the ceiling.

On the issue of reciprocal tax, Trump had said earlier, “We are going to charge countries outside of our country, countries that take advantage of the United States.” He added: “Some of them are so-called allies, but they’re not allies on trade.”

Trump had also said that the tariffs on Harley-Davidson motorcycles that were exported to India are unfair. India lowered the tax to 50 per cent, which too was not seen favorably by him. He later said that taxes on Indian motorcycles being exported to the United States could be increased.

“When they (Harley-Davidson) send a motorcycle to India, as an example, they have to pay 100 per cent tax — 100 per cent,” Trump had said. “Now, the prime minister (Narendra Modi), who I think is a fantastic man, called me the other day and said we are lowering it to 50 per cent. I said okay, but so far we’re getting nothing. So we get nothing. He gets 50 (per cent), and they think we’re doing — like they’re doing us a favor. That’s not a favor,” he added.