Backdrop & Context
In a development that could reignite trade tensions, the United States has reinstated import duties on steel & aluminium products originating from India, a move that the Indian government calls “unjustified and disruptive to mutually agreed trade norms.” This comes less than two years after the two countries had settled their metal tariff disputes under the World Trade Organization’s Mutually Agreed Solution in 2023.
The re-imposed tariffs are part of a broader US initiative to curb what it deems “unfair competition and national security threats” posed by surging global metal imports. India, however, insists that its share in US metal imports is minuscule and does not disrupt market dynamics. Indian steel exports to the US were valued at over $1.5 billion in 2023, while aluminium exports were worth $400 million.
According to a source in the Ministry of Commerce, “We view this as a breach of trust after resolving the issue through the WTO framework. Our exporters are now once again left in limbo.” Indian authorities are now preparing a formal complaint to the US and are invoking diplomatic channels to seek an urgent reversal.
Who’s Involved?
India's response is being led by Commerce Minister Piyush Goyal, who is expected to meet with United States Trade Representative Katherine Tai at the Trade Policy Forum next week. The Indian delegation is being supported by senior officials from the Ministry of External Affairs, Ministry of Commerce, and representatives from the Federation of Indian Export Organisations.
Speaking on the matter, FIEO President Dr A. Sakthivel stated, “Reinstating tariffs at this stage is extremely discouraging. It erodes the business confidence of Indian exporters who have realigned their logistics and production capacities to cater to US standards.”
On the US side, USTR Katherine Tai, in a recent press note, defended the tariffs under Section 232 of the Trade Expansion Act, saying, “Our administration is committed to protecting American industry and jobs from global overproduction. Strategic metals like steel and aluminium are core to national security.”
The MAS Framework at WTO
In 2023, both countries had reached a consensus to resolve multiple disputes under the WTO’s Dispute Settlement Body through a MAS, which allowed India to withdraw its retaliatory tariffs on several US products such as chickpeas, walnuts, apples, and almonds. In return, the US removed additional duties it had imposed on Indian steel and aluminium under the Trump-era Section 232.
The MAS was celebrated as a diplomatic breakthrough and a potential model for peaceful dispute resolution. WTO Director-General Ngozi Okonjo-Iweala at the time praised the initiative, saying, “This resolution sets a constructive example for other member states engaged in trade disputes.”
Now, Indian diplomats argue that re-imposing the same duties jeopardizes the sanctity of that agreement. “This backsliding sends a confusing signal to international trade partners,” said former Indian WTO negotiator Satwik Verma.
Impact on Indian Exporters
The steel and aluminium sectors in India are already grappling with high energy costs, volatile raw material prices, and increased competition from Southeast Asia. This tariff shock could worsen an already challenging environment.
Seshagiri Rao, Joint Managing Director of JSW Steel, said, “This policy U-turn blindsides exporters. Orders in progress will now face uncertainty at US ports, adding to warehousing costs and delays.” He added that the company may reconsider its US shipment plans unless clarity is restored swiftly.
Similarly, Hindalco Industries, one of India’s largest aluminium producers, warned that the return of duties could lead to renegotiation of contracts with US clients. “Trade disruptions of this scale are not easy to absorb in short time frames,” said a company statement.
US Trade Policy Objectives
The US has maintained that its action is consistent with the Biden administration’s goals to revive domestic manufacturing, especially in strategic sectors such as metals, semiconductors, & critical minerals. According to a US Department of Commerce report, the US is particularly concerned about global overcapacity and subsidized exports from countries like China and Vietnam, although India’s contribution remains marginal.
Trade analyst Edward Alden from the Council on Foreign Relations observed, “This move is more political than economic. With the election cycle heating up, showcasing toughness on trade and China-linked supply chains has become a bipartisan agenda. Unfortunately, India is being caught in the crossfire.”
Indian diplomats are arguing that they should not be clubbed with nations whose export practices distort global markets. “We are compliant, cooperative, and contribute to a balanced global supply chain,” emphasized an Indian official in Geneva.
Next Steps in Bilateral Dialogue
The forthcoming Trade Policy Forum in Washington D.C., scheduled for next week, is being seen as a critical window to de-escalate tensions. Indian officials are expected to request a review under the MAS provisions and may consider WTO arbitration if talks fail.
“We are hopeful that through mature dialogue, we will arrive at a solution that respects both sides' strategic and economic interests,” said Indian Ambassador to the US Taranjit Singh Sandhu.
The Indian side is also considering invoking specific clauses from the bilateral Trade and Investment Framework Agreement to strengthen its case. Meanwhile, industry representatives from both nations are expected to participate in side meetings to explore possible sector-specific waivers or timelines.
India’s Strategic Trade Positioning
As India positions itself as a global manufacturing hub under the “Make in India” and “Atmanirbhar Bharat” programs, it is increasingly relying on trade partnerships with the US, EU, & Southeast Asian nations. The country’s aspiration to become a trusted alternative to China in global supply chains is contingent on stable trade ties and predictable policies.
Dr. Arpita Mukherjee, Professor at ICRIER, commented, “Trade relations are no longer just about tariffs, they’re tied to geoeconomics, investment trust, and security alliances. For India to attract capital in metal-intensive sectors, such volatility must be ironed out.”
Exporters are also urging the Indian government to expand Free Trade Agreements with countries like the UK and the EU, to diversify dependence away from the US. “This is a wake-up call for our negotiators,” said Rakesh Bansal of the Engineering Export Promotion Council.
Key Takeaways:
• India is challenging the US decision to reimpose tariffs on steel & aluminium.
• The issue may dominate discussions at the upcoming India–US Trade Policy Forum.
• Earlier, the issue was resolved peacefully via MAS at the WTO in 2023.
• Exporters from India warn of shipment delays, contract issues & financial losses.
• US defends the tariffs as essential to protect jobs & national security.
• India may seek WTO arbitration if bilateral talks do not yield results.
