India’s Tariffs on Steel and Aluminium Imports
India has recently announced its intention to impose tariffs on $7.6 billion worth of imports from the United States. This decision comes as a direct response to the U.S. reinstating 25% tariffs on steel and aluminium. The Government of India aims to mirror the impact of these tariffs on its own exports. The new tariffs will take effect thirty days after notification, on May 9, 2025.
Background of Tariffs
Recently, U.S. President Donald Trump reinstated tariffs on steel and aluminium, eliminating previous exemptions. This protectionist policy aims to support domestic industries against unfair trade practices. Trump had first introduced these tariffs in March 2018. India’s response began in June 2019 when it faced the removal from the Generalized System of Preferences (GSP) by the U.S.
India’s Retaliatory Measures
India’s tariffs target 28 items, including agricultural products like apples and walnuts. The country views these measures as necessary to protect its trade interests. In 2020, the U.S. expanded its tariff regime to include derivatives of steel and aluminium. The trade situation improved briefly under President Joe Biden but reverted under Trump’s renewed administration.
WTO Involvement
India has notified the World Trade Organisation (WTO) about its tariffs. The U.S. claims its tariffs are justified under national security statutes. However, India and other nations argue that these measures are safeguards. India contends that mandatory consultations before implementing such tariffs did not occur, reserving the right to suspend obligations that affect its trade adversely.
Impact on Indian Industries
The 2018 tariffs raised concerns about the competitiveness of Indian exports in the U.S. market. Finished steel exports to the U.S. saw declines in FY 2019-20 and FY 2020-21. Recent data shows a 44.21% increase in exports until February 2025, following a previous decline. Steel manufacturers express caution regarding the new measures, fearing volatility in global markets.
Broader Implications
Experts suggest that India’s actions may affect ongoing negotiations with the U.S. India’s approach contrasts with the U.S.’ unilateralism, positioning it as a defender of multilateral trade norms. The tariffs align with India’s Make in India initiative, aiming to boost domestic industries. The outcome will depend on the U.S.’ response to India’s proposed tariffs.
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