Harley makes bikes in Thailand not just to skirt the 60 percent applied most favored nation tariff, but because the country is an export platform. importers that tariff overhang causes in developing countries. If a country’s tariff is unbound, or there is a big difference between a country’s applied and bound rates, how would Trump’s matching tariff be calculated? If it’s allowed to fluctuate, it would create the same business-killing uncertainty for U.S. For that matter, Harley also produces in Thailand, which has a 60 percent applied most favored nation tariff that’s unbound. This means there’s no legal limit on this tariff under India’s tariff schedule under the World Trade Organization. Harley’s main source of uncertainty in India is not the 100 percent applied most favored nation tariff, but rather that this tariff is unbound. Trump couldn’t possibly calculate his retribution tariff in any meaningful sense, and his Harley case study shows why. in trade wars and be catastrophic for American industries and consumers. Put aside, for the moment, that this combo tariff would destroy the rules-based global economy, mire the U.S. To reshore Harley’s jobs, the fix would presumably be an additional 90 percent matching tariff. But as Trump urged, India is “very big with tariffs,” so more would be needed. Like other countries, India would face the across-the-board 10 percent tariff. If Indian Motorcycle was from India, as Trump clearly believes, then it would pay America’s 2.4 percent most favored nation rate, not zero.īut Trump’s main point is right: Harleys are subject to a 100 percent applied most favored nation tariff in India. It’s true that Indian Motorcycle sells tariff-free in the U.S., but that’s because it’s an American company. Trump explained that Harley has to build bikes in India to get around its sky-high tariff, in contrast to Indian Motorcycle, which enjoys zero-tariff market access to the U.S. He revealed the details in recalling his frustration with India’s treatment of Harley Davidson. Trump talked matter-of-factly about the 10 percent tariff, but really took over the interview when pitching his matching tax. But as the Wall Street Journal editorial board put it: “Donald Trump exaggerates many things, but on economic policy his record is that he means what he says.” I’m loathe to read too much into an interview.
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