Told PM Modi will impose reciprocal tariffs on India: US President Donald Trump
Reiterating his claim that “every country” took advantage of the US with tariffs, Trump began by citing the example of tariffs on cars in India
President Donald Trump has said that he told Prime Minister Narendra Modi that the US will impose reciprocal tariffs on India, claimed that he brushed away India’s objections to his decision during their meeting at the White House last week, and indicated that Tesla building a factory in India was “very unfair” to the US.
Trump reiterated his claims about India’s high tariffs, a point that was reinforced by Elon Musk, Tesla’s owner and the head of Department of Government Efficiency (DOGE), in a joint interview the two most powerful men in America gave to Fox News. The interview was recorded earlier but broadcast on Tuesday night eastern time (Wednesday morning IST).
Reiterating his claim that “every country” took advantage of the US with tariffs, Trump began by citing the example of tariffs on cars in India. Turning to Musk, he said, “It’s impossible for him to sell a car, practically, in, as an example, India. I don’t know if that’s true or not, but I think…” Musk then immediately intervened to complete Trump’s sentence and said, “The tariffs are like 100% import duty.” The import duty on EVs that cost at least $35,000 is 15% in India, subject to conditions.
Trump added that if Musk wanted to build a factory in India, that was “okay” but also “unfair” to the US. “That’s unfair to us. It’s very unfair.”
Using that as the peg, Trump said, “I told Prime Minister Modi… Here’s what you do. We are going to… be very fair with you.” Before Trump completed his thought, the interviewer asked him if the tariffs India charged were 36%. Trump said, “Much much higher.” Musk again added his bit, “It’s 100% on auto imports..100%.”
Trump then picked the thread of his response again and recounted his conversation with Modi, “I said, ‘Here is what we are going to do: reciprocal. Whatever you charge, I am charging’.” Trump claimed Modi then said, “No, no, I don’t like that,” to which Trump claimed he responded to Modi by saying, “No, no, whatever you charge, I am going to charge. I am doing that with every country.” Musk again added, “It seems fair.”
Trump laughed and said it was indeed fair and that no one could argue with him on it. He claimed that the media could not say to him anymore that he charged tariffs and it was “terrible”. “I don’t say that anymore because I say, ‘Whatever they charge, we will charge’.”
Musk again intervened to support Trump’s point and said, “It needs to be at a level playing field and fair and square.” Trump then claimed that they would now “make a lot of money” and “a lot of businesses” would come pouring in.
The ministry of external affairs did not respond to Trump’s comments about the negotiations with Modi.
In the interview, neither did Musk offer more details on auto import duties nor did Trump give more details on what he meant by Musk possibly setting up a factory in India. But the wider context is that India has had high tariffs on electric vehicles. In a new EV policy introduced right before the elections in 2024, India reduced import duties on EVs, provided that the EV manufacturer set up a factory within a certain time frame in India. This policy was widely assumed to be aimed at wooing Tesla, but Musk decided at the time to deepen his business engagements in China rather than expand operations to India. Separately, in the past, Trump has also complained how Harley Davidson was forced to set up a plant in India to avoid high duties.
To be sure, the US car maker on Tuesday posted 13 job openings in suburban Mumbai on its official webpage for both customer-facing and backend roles, days after Modi met Musk.
The comments by both Trump and Musk appeared to be targeted at two separate but interlinked features of India’s economic policy: high tariffs for foreign goods, and incentives to foreign manufacturers to set up domestic operations in India. In Trump’s world view, both are a part of a zero sum game that hurt America, either by taxing its products too high and reducing their competitiveness, or taking away US manufacturers who would otherwise set up plants in the US and thus taking away American jobs. Trump’s comments opposing US companies setting up factories in India is a sign that the past policy of friendshoring, where the US actively encouraged companies to invest in partner countries including India, is now in jeopardy.
Last Thursday, just hours before meeting Modi, Trump signed a memorandum that was based on the premise that while the US was open to other countries, others imposed unfairly high barriers on American products and the “lack of reciprocity” was responsible for America’s large trade deficits.
Trump then announced a “Fair and Reciprocal plan” whereby the US would counter non-reciprocal trading arrangements by “determining the equivalent of a reciprocal tariff with respect to each foreign trading partner”. This would be based on studying the partner’s tariff rates charged on US products, “unfair, discriminatory or extraterritorial taxes” imposed on US businesses, non tariff barriers and “burdensome regulatory requirements”, and exchange rate and mercantilist policies that made US products less competitive. A wide range of Indian policies and actions may fall within the ambit of this definition, leading to high tariffs on Indian imports.
Trump raised the issue multiple times, both in private and public, during Modi’s visit. Both sides agreed to designate senior officials to conclude the first tranche of a bilateral trade agreement (BTA) by the fall of this year.
Commenting on Trump and Musk’s comments as well as the prospects of a BTA, Alexander Slater, managing director with Capstone, a policy forecasting and strategic advisory group in DC and a former India-based managing director of the US-India Business Council, said that Trump’s tariff threats were serious and he anticipated that Trump will either move ahead with broad tariffs on non-China trading partners either in the form of reciprocal tariffs that he recently announced or universal tariffs he announced during the campaign or a combination of the two.
Slater said, “The best approach for any country seeking an exclusion is to find ways to reduce its goods trade deficit with the United States. The Trump Administration sees these deficits as proxies for unfair trade practices. That’s clear in the President’s comment yesterday on reciprocal tariffs — the motivation is to eliminate these imbalances. The key is for countries to figure out how to address these concerns in ways that complement their own needs.” He added that for India, this would appear to be “stepping up energy purchases” and “security-related purchases” that better position India to secure its borders with China.
