India Proposes Retaliatory Tariffs on U.S. Goods in Response to Trump-Era Steel and Aluminum Duties

India Proposes Retaliatory Tariffs on U.S. Goods: India has proposed retaliatory duties on certain US products, equal to the additional duties on India-origin steel and aluminium products announced by the US. On May 9, India notified the World Trade Organization of its intent to eliminate the concession or other obligations on account of tariffs imposed by the US on the steel and aluminium products of India.

The US revised the safeguard measures on the imports of steel and aluminium articles, following a directive of Donald Trump, back in March, with an unlimited time frame of when the US imposed 25% tariffs on products originating in India.

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According to the WTO notification, such a measure would result in collection of $1.9bn in duties on $7.6bn value of steel and aluminium products imported from India into the US.

In retaliation to such tariff, India proposed an equivalent amount of duties on selected products originating from the US. This is not the first time the US has put a safeguard duty on Indian imported goods on steel. The first Trump administration, in 2018, imposed extra duties on steel and aluminium, at 25% and 10% ad valorem, respectively. India retaliated in 2019 by imposing extra tariffs on select good imports from the US.

Nevertheless, both parties had agreed to a resolution of the duty-dispute under Joe Biden’s administration. In total, seven WTO disputes were resolved by both India and the United States through negotiation. This time, too, India has played the retaliatory duty card at a time when the two countries are still negotiating a bilateral trade agreement, as the issue of tariffs on steel and aluminium imports will likely be under consideration in the negotiations.

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Earlier in April, India requested consultations with the U.S. under the WTO's safeguard agreement, after the U.S. decided to place additional tariffs. However, the U.S. notified the WTO that the tariffs were based on national security grounds and should not be considered as safeguard tariffs.

Although the additional duty on Indian steel and aluminium to the U.S. would have impacted metal manufacturers in India, the overall impact would have been limited as the country is in relative good shape since it has a diversified export market. According to the data provided by the International Trade Administration, the U.S. made up just over 3% of Indian steel exports. Also, as per the report by Geojit Investments, metal companies such as JSW Steel, Jindal Stainless, Vedanta, and Tata Steel have only 2-10% of exposure to the US market.

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