India to Impose Retaliatory Tariffs on U.S. Imports Amid Trade Dispute

India-U.S. Trade Dispute Latest News

• In response to the U.S. imposing 25% tariffs on steel and aluminium imports in March, India has notified the WTO of its plan to impose tariffs on $7.6 billion worth of U.S. imports. 
• The move aims to recover an estimated $1.91 billion in losses suffered by Indian exporters. 

Reinstatement of U.S. Tariffs on Indian Steel and Aluminium

• In March 2025, U.S. President Donald Trump, in his second term, reimposed 25% tariffs on all imports of steel and aluminium, eliminating earlier exemptions. 
• The move aimed to protect U.S. domestic industries from “unfair trade practices” and “global excess capacity.”

Historical Context: Tariff Measures During Trump’s First Term (2018)

• Trump first introduced 25% tariffs on steel and 10% on aluminium in March 2018. 
• These protectionist measures were part of his “America First” economic approach.

Temporary Easing Under Joe Biden (2021–2023)

• After Joe Biden assumed office in 2021, trade tensions eased. 
• During PM Modi’s U.S. visit in September 2023, the U.S. pledged to provide greater market access to Indian steel and aluminium as a gesture following India’s withdrawal of earlier retaliatory duties imposed in 2019.

Return to Protectionism in 2024

• With Trump’s return to the presidency in 2024, the earlier tariffs were reinstated, this time setting both steel and aluminium duties at 25%.

India’s Retaliation in 2019 Post-GSP Removal

• India had earlier retaliated in June 2019 when the U.S. revoked India’s Generalised System of Preferences (GSP) benefits. 
  • GSP is a unilateral trade measure where developed countries offer preferential tariff treatment to developing countries, often by reducing or eliminating tariffs on specific products.
• India responded by imposing tariffs on 28 U.S. imports, including apples, almonds, and walnuts.

Dispute Over Nature of Tariffs

• India disputes the U.S. claim that the tariffs on steel and aluminium are based on national security concerns.
• The U.S. argues its actions fall under GATT 1994’s security exception and are not “safeguards.”
• India, along with the EU, China, and the U.K., disagrees and views the tariffs as safeguard measures, which have different legal obligations under WTO rules.

Lack of Mandatory Consultations

• India has pointed out that the mandatory pre-consultations required under the Agreement on Safeguards (AoS) were not conducted.
• According to India, this procedural lapse violates WTO obligations.

Right to Suspend Concessions

• Citing the adverse impact on its trade, India has reserved its right to suspend trade concessions or obligations toward the U.S.
• India has stated it will take measures that are “substantially equivalent” to the negative effects caused by the U.S. tariffs.

Concerns Over Competitiveness

• Indian exporters had expressed worry that U.S. tariffs would make their products costlier and uncompetitive.
• In 2018, India faced disadvantage compared to countries that had received exemptions from the U.S. tariff regime.
• The current regime offers no exemptions, leveling the field but still raising pricing concerns.

Sharp Decline in Steel Exports

• The impact of U.S. tariffs on India’s steel exports was substantial:
  • Exports to the U.S. dropped by 48.4% in FY 2019-20 and 46.7% in FY 2020-21.
  • U.S. share in India’s steel exports fell from 3.3% (2017-18) to 2.5% (2018-19).

Recent Recovery in Exports

• Despite past declines, FY 2024-25 has seen a 44.21% rise in steel exports until February.
• This follows a 42.3% decline in FY 2023-24, indicating recent resilience despite global challenges.

Industry Calls for Caution

• Leading producers like SAIL have warned of global market volatility due to U.S. protectionist policies.
• There are fears of retaliatory tariffs affecting the global trade balance.

Limited Gains for the U.S.

• Ironically, the U.S. tariffs did not benefit its own economy significantly.
• A 2019 analysis by the Federal Reserve found only a “small boost” in manufacturing jobs.
• These gains were offset by higher input costs and the negative effects of retaliatory tariffs.

A Strategic and Calibrated Response

• India’s WTO action is seen as strategic rather than reactive.
• India’s approach is “rules-based and calibrated”, contrasting with the U.S.’ unilateralism.
• This positions India as a defender of multilateral trade norms, enhancing its reputation in global trade forums.

Alignment with ‘Make in India’

• The move reflects India’s tougher stance on politically sensitive sectors like steel and aluminium.
• This assertiveness aligns with the Make in India initiative, aimed at boosting domestic industry and reducing foreign dependency.

India-U.S. Trade Dispute FAQs

Q1. Why is India imposing tariffs on the U.S.?

Ans. To recover losses from U.S. tariffs on steel and aluminium and assert trade rights under WTO norms.

Q2. How much will India target in tariffs?

Ans. India will impose tariffs on $7.6 billion worth of U.S. imports, reflecting equivalent trade damage.

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Q3. What legal basis does India use?

Ans. India argues the U.S. measures are safeguard-like and failed required consultations, violating WTO’s Agreement on Safeguards.

Q4. How have Indian industries reacted?

Ans. Steel producers warned of global volatility, citing rising costs and calls for caution in an unstable market.

Q5. What’s the global trade implication?

Ans. India’s assertive WTO move boosts its image as a multilateral trade defender amid growing protectionism from the U.S.

Source: TH