US President Donald Trump has a bee in his bonnet about high import tariffs on Harley-Davidson motorcycles, which India reduced to 50 per cent from 100 per cent to placate him. This is a very minor issue in the $140 billion India-US trade, but a vocal one as Mr Trump addresses his electorate in dwelling on Harley-Davidsons, that incidentally are also made in India now. This cropped up again at a major US forum where Mr Trump addressed the governors of all states. India should be able to tackle this through some quiet trade diplomacy as scrapping such a tariff on a negligible number of high-end luxury motorcycles means very little over revenue collection, even if official India is obsessed with revenue after GST’s launch on July 1, 2017.
The minimum support price India pays its farmers is a far bigger issue for the US. India may be quite helpless on this as it’s much more important to subsidise farming — agricultural distress is so high that it’s led to the deaths of lakhs of farmers over the past decades. It won’t be easy to deal with Mr Trump, who must project “America First” to his constituents, not just to keep a pre-2016 poll promise but also with crucial elections this year to the House of Representatives. The subsidy flexibility for developed nations, said to be around $160 billion by the US and EU in product-specific support, is causing major asymmetry in agricultural trade rules, according to India and China. The distortions in global trade in agriculture and the slant against developing countries can’t simply be wished away. Even so, there’s room for trade diplomacy as India-US ties go far beyond trade.
