In a move set to reverberate through global trade and potentially impact India’s burgeoning metal exports, President Donald Trump announced a dramatic increase in import tariffs on steel and aluminum to 50 percent, up from the current 25 percent. 

The decision, revealed by President Trump during a visit to a United States Steel Corp. plant near Pittsburgh, Pennsylvania, aims to protect American workers and fortify domestic industries effective June 4. While the direct commercial impact on India may be limited for some sectors, the broader implications of escalating US protectionism are a cause for concern in New Delhi.

President Trump, speaking in front of cheering workers, declared the new tariffs a measure to prevent other nations from “stealing” American industry. “It’s at 25 percent, they can sort of get over that fence, at 50 percent they can no longer get over the fence,” he stated, highlighting the protective intent behind the hike. This announcement coincided with a contentious pivot on the proposed acquisition of US Steel by Japan’s Nippon Steel Corp., a deal Trump had previously opposed but now seemingly endorses under a “partial ownership” structure.

Three U.S. legal tools Trump uses for increasing tariffs:

India Braces for Potential Fallout

For India, a significant player in the global steel and aluminum markets, the implications are multifaceted. While India’s direct steel and aluminum exports to the US form a relatively small share of overall US imports (which are dominated by Canada and Brazil), the Federation of Indian Export Organizations (FIEO) has voiced “concern” over the tariff hike.

President of FIEO, S.C. Ralhan, warned that the increased tariffs could “have a significant bearing on India’s steel exports, especially in semi-finished and finished categories like stainless steel pipes, structural steel components, and automotive steel parts.” These products are integral to India’s growing engineering exports, and higher duties risk eroding their price competitiveness in the American market. In FY2024-25, India exported approximately $6.2 billion worth of steel and finished steel products to the US, along with about $0.86 billion in aluminum and its products.

FIEO has urged the Indian government to engage diplomatically with the US to ensure Indian exporters are not “unfairly disadvantaged,” particularly as a 25 percent additional duty would be a “huge burden” difficult for exporters and importers to absorb. Ralhan also stressed the need for Indian exporters to diversify their markets and invest in higher-grade, value-added products to mitigate the impact of such protectionist measures.

India-US Trade:

Chairman EEPC India, Pankaj Chadha said “it’s unfortunate that while BTA negotiations are going on, such unilateral tariff increases should be done. It only makes the work of the Negotiators much more difficult and complicated. Will definitely impact the Engineering Exports, which are about 5 billion dollars under this head.”

“Also, we urge that since the UK has been given exemption from Section 232, the same exemption should also be given with TRQ restrictions to India,” he added.

Dumping Concerns and Retaliation Risk

A major concern for India is the potential for global trade dynamics to shift, leading to increased dumping of cheap steel in alternative markets. With major producers like the EU, China, and Brazil facing steeper barriers to the US market, their exports could be redirected, potentially flooding destinations like India. Analysts warn that this could squeeze domestic prices and margins in India, which has already imposed anti-dumping duties on certain steel products from countries like China, Vietnam, Korea, and Thailand.

Ajay Srivastava of GTRI highlighted that the new 50 percent tariffs, invoked under Section 232 of the U.S. Trade Expansion Act of 1962 (which cites national security threats), will likely push US steel prices even higher, to around $1180 per metric tonne. This will increase costs for US industries like automotive, construction, and manufacturing, potentially leading to inflationary pressures and job losses.

For India, the consequences are “direct,” according to Srivastava, with the country’s $4.56 billion worth of iron, steel, and aluminum product exports to the US now facing sharply higher tariffs. Notably, India had previously issued a formal notice at the World Trade Organization (WTO) signaling its intention to impose retaliatory tariffs on US goods in response to the earlier steel tariffs. With this doubling of duties, “it remains to be seen whether India will carry out the retaliation, by increasing tariffs on certain US exports within a month,” Srivastava noted.

Beyond immediate commercial impacts, the overarching concern for India lies in the broader macro environment. Trade disruptions and an escalating wave of protectionist policies tend to weigh on global growth and commodity demand, creating an uncertain landscape for all trading nations.

Furthermore, the decision to further protect carbon-intensive industries like steel and aluminum without attaching green conditions or climate considerations raises questions about the US administration’s commitment to global climate goals and sustainable industrial practices, an area where India is increasingly focused.

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