Like the UK and Australia, India too may not yet retaliate against US tariffs of 25 per cent on steel and aluminium imposed on Wednesday. It would instead try and get some relief as part of the negotiations on the proposed India-US bilateral trade agreement (BTA), sources said.
“India had imposed retaliatory duties against the US when similar tariffs on steel were imposed in 2018 by US President Donald Trump during his first term. However, this time the two countries are working on a BTA and it gives India a chance to reach an agreement on the matter. So retaliatory tariffs are not called for at the moment,” a source tracking the matter told businessline.
As much as $5 billion worth of exports of engineering goods exported to the US annually, of the total $20 billion, are likely to take a hit because of the duties, per estimates made by the Engineering Export Promotion Council of India (EEPC India). “About $1 billion worth of goods in transit in the high sea would be affected by the tariffs announced on Wednesday,” according to EEPC India Chairman Pankaj Chadha.
While the Indian steel industry anticipates minimal impact from the new US tariffs, as India exports less than 100,000 metric tonnes to the country, the impact could be felt in terms of availability of scrap – a steel making feedstock in some of India’s mills, according to steel industry sources. “Incremental production by mills in the West could impact prices here, because of supply constraints,” the steel industry source said.
The EU and Canada have already announced countermeasures in response to Trump’s imposition of tariffs on aluminium and steel, a policy purportedly aimed at providing US manufacturers with a level playing field.
- Also read: Tamil Nadu set to sustain 8%+ growth, first economic survey reveals
China’s foreign ministry spokesperson Mao Ning said his country will take all the necessary measures to safeguard its legitimate rights and interests while Japan’s top government spokesperson Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.
UK Prime Minister Keir Starmer said in the House of Commons that negotiations with the Trump administration over a bilateral trade deal were ongoing and his government was taking a “pragmatic approach” but “we will keep all options on the table.”
Australian Prime Minister Anthony Albanese said the steel and aluminium tariffs were unjustified but his country would not impose retaliatory tariffs as tariffs and escalating trade tensions were a form of economic self-harm.
India at a crossroads
Commerce & Industry Minister Piyush Goyal was in Washington DC last week to take ahead plans for a BTA that Trump and Prime Minister Narendra Modi agreed to work on last month for a “more balanced and fair trade relationship”.
New Delhi is hopeful that offers made in the BTA could help it avoid reciprocal tariffs that Trump has threatened to impose on high tariff charging countries. But the US was not satisfied with the discussions with India in Washington DC and wants the country to up its ambitions and open up more.
India’s trade surplus with the US was at around $35 billion in FY 24 as it exported goods worth $77.5 billion to its top export destination and its imports were at $42.19 billion.
According to Sehul Bhatt, Director- Research, Crisil Intelligence, the US move to slap a flat 25 per cent tariff on steel imports from March 12, 2025, compared with multiple types of lesser levies previously, will have a three-fold impact.
Firstly, it will lower the exports of its trade partners as local production rises, but India is unlikely to be impacted materially because only 2 per cent of its total finished steel exports in the first 9 months of this fiscal were to the US.
Two, there will be a diversion of exporter inventory to other importer-nations at aggressive prices, especially in a milieu of increasing global competition. This could bring down the prices of steel in India, already trending at 4-year lows, further. That means the Indian government may have to step in with safeguard duty to support domestic capacities. “The timing and quantum of this will be crucial,” he told businessline.
