India Cuts Tariffs to Manage Trump’s Trade Threats

Indian MP Ranjeet Ranjan on her Harley Davidson in 2016 - during his first term Trump brought up the then higher tariffs on the bikes. Last week, India slashed import duties on motorcycles, reducing tariffs on heavyweight bikes above 1,600cc from 50% to 30% and smaller ones from 50% to 40%. This pre-emptive move aims to facilitate Harley Davidsons' entry into the country while staving off tariff threats. Former President Donald Trump is back in office and is wielding trade measures against various nations, including allies. Experts like Ajay Srivastava from the Global Trade Research Institute warn that if he acts against neighbors like Canada and Mexico, India, which enjoys a trade surplus with the U.S., could be next. India and the U.S. saw bilateral trade exceed $190 billion in 2023, with Indian merchandise exports to the U.S. soaring 40% since 2018. Beyond motorcycles, India has also cut tariffs on satellite ground installations, synthetic flavoring essences, and fish hydrolysate, enhancing U.S. export opportunities. These changes are indicative of a significant policy shift that could boost U.S. exports, according to Srivastava. India used to be one of the world's most protectionist economies, but after liberalizing in the 1990s, it has seen tariffs rise again to about 18%, higher than those of neighboring countries. Trade expert Biswajit Dhar highlights that India's agricultural market access is still a point of contention as India dropped retaliatory tariffs on U.S. imports like almonds, apples, and lentils recently. While tensions remain, India's strategic partnerships and Modi's relationship with Trump might help mitigate frictions. Answers regarding the evolving trade landscape are likely to emerge during Modi's upcoming visit to the White House.