Trump’s Tariffs on Steel and Aluminum Put $4.5B in Indian Exports at Risk, Retaliatory Measures Under Review

Trade tensions between India and the United States are rising after a sharp increase in U.S. import tariffs on steel and aluminum.

In February 2025, the Trump administration announced a 25% tariff on all steel and aluminum imports, citing national security concerns. Then in May, the U.S. doubled the tariffs to 50%, with the higher rate set to take effect on June 4.

This move directly affects Indian metal exports worth over $4.5 billion annually and has triggered a strong response from India, which is now considering retaliatory action.

India Challenges Tariffs at WTO Under Safeguard Rules

India responded by notifying the World Trade Organization (WTO) on May 9 of its intent to withdraw certain trade concessions extended to the U.S.

The notice was issued under Article 8.2 of the WTO Agreement on Safeguards. This provision allows affected countries to take countermeasures if safeguards are introduced without justification.

India gave the U.S. a 30-day window to remove the tariffs or face retaliation. However, the U.S. rejected India’s WTO notice, maintaining that the tariffs are a national security matter and therefore not subject to WTO oversight.

India Considers Retaliatory Tariffs on U.S. Imports

Following the U.S. refusal to engage through WTO channels, India is now reviewing retaliatory options. According to officials at the Ministry of Commerce, India may impose tariffs on selected U.S. imports if no resolution is reached.

While the list of affected goods has not been finalized, India is likely to target politically sensitive exports from the U.S. Officials have said retaliation could still be avoided if the U.S. agrees to address the issue through bilateral trade talks.

Trade Talks Continue

India and the U.S. are currently negotiating an Early Harvest Agreement, a preliminary arrangement under a larger Bilateral Trade Agreement (BTA).

Indian negotiators are pushing to include metal tariffs in the discussions, seeking either rollback of the duties or preferential treatment for Indian exports. U.S. trade representatives, however, have so far declined to include the Section 232 tariffs in the negotiation framework.

Despite rising tensions, Indian officials have not shut the door on a negotiated solution. They are still hopeful that the Early Harvest Agreement could include some compromise on the tariffs.

But with the U.S. unwilling to discuss the issue at the WTO or include it in current trade talks, the likelihood of a quick resolution appears low. Unless there is a policy shift from Washington in the coming weeks, India is expected to move ahead with retaliatory tariffs.

Impact on Indian Exporters

The increased tariffs are expected to severely impact Indian companies with major exposure to the U.S. market. Tata Steel and JSW Steel, both large exporters of finished and value-added steel products to the U.S., face declining volumes and squeezed profit margins.

Aluminum giant Hindalco Industries is also at risk, particularly through its U.S.-based subsidiary, Novelis, which could suffer a significant earnings hit. Industry experts warn that if tariffs remain in place for an extended period, Indian firms may need to cut production or seek alternative export destinations.

WTO Dispute System Remains Stalled

India’s limited ability to act through the WTO is part of a larger problem. The WTO’s Appellate Body has been non-functional since 2019 due to a U.S. block on judicial appointments. As a result, even successful panel rulings cannot be enforced.

This lack of enforcement has made it harder for countries like India to resolve disputes through legal channels, pushing them toward bilateral negotiations or retaliatory measures.

Stay informed with Decode Today! Subscribe for the latest updates on global news, businesses, market trends, technology, and the economy.