Washington DC:

Shortly after announcing sweeping reciprocal tariffs which will impact all nations which impose tariffs on US goods, Donald Trump spoke about how India is “right at the top of the pack” when it comes to tariffs. President Trump’s remarks come hours before his bilateral meeting with Prime Minister Narendra Modi during which the two leaders will discuss the entire gamut of India-US ties. Tariffs will figure high on the agenda.

Speaking to reporters at the Oval Office after making the announcement for reciprocal tariffs, President Trump said “allies are often worse than enemies” and said the US will now impose a tit-for tat tariff on all nations which imposes tariffs on US goods.

President Trump said “India charges tremendously high tariffs”. He recalled how “Harley Davidson couldn’t sell their motorbikes in India because of the fact that in India – the tariff was so high.”

He went on to say that “Harley was forced to build… But I think they built a factory in India in order to avoid paying the tariffs. And that’s what people can do with us too.” The President, who has called ‘tariffs’ his favourite word in the dictionary on multiple occasions, aims to follow this model of trade aiming to “make America great again”.

He said companies that wish to sell their products in the US would need to set up factories and industries in the United States to avoid steep tariffs. “They can build a factory here, a plant or whatever it may be here and that includes the medical, that includes cars, that includes chips and semiconductors,” he said.

Earlier in the day, tech billionaire and Donald Trump’s biggest supporter and confidant Elon Musk and his family met PM Modi. Musk, who is the founder of Tesla and SpaceX, has been contemplating bringing his business to India. He has made announcements about it in the past, but has not yet started his factories in India.

Speaking about Elon Musk, President Trump said, “They met. I assume he wants to do business in India. But India is a very hard place to do business in because of the tariffs,” adding that “I would imagine he met possibly because he is running a company, he is doing this as something that he has felt strongly about for a long time.”

Prime Minister Narendra Modi is in the US on a two-day official visit. He will be holding bilateral talks with US President Donald Trump. While the two leaders will discuss the entire gamut of India-US ties, tariffs, visas, and immigration will be key focus areas.

Days before PM Modi’s visit to the US, India, in the Union Budget presented in Parliament on February 1, significantly reduced customs duties on high-end motorcycles, cars and smartphone parts – a move which will give a big boost to American companies like Harley-Davidson, Tesla and Apple.

Finance Minister Nirmala Sitharaman, however, made it clear that custom duty rationalisation was introduced in the Budget to ensure Indian economy become aatmanirbhar (self-reliant), and is not a signal amid Donald Trump’s tariff announcements.

“We are looking at our own economy. We are looking to strengthen the foundation of the Indian economy, to make it a manufacturing hub,” she said while speaking exclusively to NDTV’s Sanjay Pugalia.
 

U.S. President Donald Trump looks on, as he signs an executive order in the Oval Office at the White House in Washington, U.S.,
| Photo Credit: Reuters

U.S. President Donald Trump on Saturday (February 1, 2025) signed an order to impose stiff tariffs on imports from Mexico, Canada and China, fulfilling a campaign promise but raising the prospect of increased prices for American consumers.

Mr. Trump is declaring an economic emergency to put duties of 10% on all imports from China and 25% on imports from Mexico and Canada — America’s largest trading partners — except for a 10% rate on Canadian oil.

The White House said Mr. Trump’s order also includes a mechanism to escalate the rates if the countries retaliate against the U.S., as they have threatened.

Mr. Trump says the tariffs are to force the countries to do more to stop the flow of fentanyl into the U.S., but also dovetail with his embrace of protectionist measures to boost domestic manufacturing and as a potential source of revenue for the federal government.

“You see the power of the tariff,” Mr. Trump told reporters Friday. “Nobody can compete with us because we have by far the biggest piggy bank.”

The Republican president is making a major political bet that his actions will not worsen inflation, cause financial aftershocks that could destabilise the worldwide economy or provoke a voter backlash. AP VoteCast, an extensive survey of the electorate in last year’s election, found that the U.S. was split on support for tariffs.

It is possible that the tariffs could be short-lived if Canada and Mexico can reach a deal with Mr. Trump to more aggressively address illegal immigration and fentanyl smuggling. Mr. Trump’s move against China is also tied to fentanyl and comes on top of existing import taxes.

Mr. Trump is honouring promises he made in the 2024 White House campaign that is at the core of his economic and national security philosophy, though his allies had played down the threat of higher import taxes as mere negotiating tactics.

The president is preparing more import taxes in a sign that tariffs will be an ongoing part of his second term. On Friday, he mentioned imported computer chips, steel, oil and natural gas, as well as against copper, pharmaceutical drugs and imports from the European Union — moves that could essentially pit the U.S. against much of the global economy.

Mr. Trump’s intentions drew a swift response from financial markets, with the S&P 500 stock index slumping after his announcement Friday.

It is unclear how the tariffs could affect the business investments that Mr. Trump said would happen because of his plans to cut corporate tax rates and remove regulations. Tariffs tend to raise prices for consumers and businesses by making it more expensive to bring in foreign goods.