The India-U.S. trade deal is pivotal for Trump’s economic policy, particularly in the context of companies like Harley-Davidson and Tesla who rely on manufacturing and importing from countries like Thailand and Germany. Despite the potential tariff reductions, U.S. exports haven’t increased significantly, indicating the need for a more formalized trade agreement to improve market access for both nations.
The trade relationship between India and the United States plays a crucial role in President Trump’s economic agenda. Key players, including Harley-Davidson and Tesla, do not produce vehicles in the U.S. specifically for the Indian market. Currently, Harley-Davidson imports motorcycles from Thailand, while Tesla plans to ship electric vehicles from Germany due to restrictions on imports from China.
Lower production costs abroad, including reduced freight expenses and economies of scale, incentivize American companies to manufacture overseas. Moreover, India’s existing free trade agreements allow these companies to export goods without incurring duties. Analysts note that Harley-Davidson relies on its facilities in Thailand for larger motorcycle models, demonstrating the financial advantages of this arrangement.
Even a complete elimination of tariffs on U.S. motorcycles in India would not make manufacturing there more appealing for Harley-Davidson as it still benefits from lower delivery costs and quick shipping times from Thailand. U.S.-based manufacturers face difficulties selling their products in India, highlighted by President Trump’s frustrations over high tariffs.
India’s Commerce and Industry Minister, Piyush Goyal, is currently in discussions in Washington regarding potential trade benefits. The Indian government expresses readiness to consider duty reductions for U.S. products, specifically motorcycles and bourbon whiskey. However, this gesture has not yet translated into increased U.S. exports, as evidenced by the minimal share of bourbon imported directly from the U.S. compared to third-party sources.
Developing a comprehensive trade agreement could enable U.S. companies to penetrate the Indian market more efficiently while providing Indian exporters with improved access to the U.S., thereby enhancing bilateral trade relations.
The trade negotiations between India and the U.S. are strategically vital for both nations, particularly for President Trump’s economic strategies. While reducing tariffs may seem beneficial, actual gains for U.S. companies have yet to manifest. Establishing a formal trade deal could significantly bolster market access for both countries, ultimately enhancing their economic ties.
Original Source: m.economictimes.com
