Industry participants and trade experts have asked the Centre to widen the scope of the ongoing discussion on a bilateral trade agreement between India and the US to seek concessions from the proposed sectoral tariff announced by the US President Donald Trump on steel, aluminium and products thereof from June 4.
India had moved the World Trade Organisation (WTO) when the Trump administration reimposed a 25 per cent sectoral duty on these items in March, claiming that the US move amounted to a safeguard duty. The US rejected India’s claim arguing that these tariffs were imposed under Section 232 for national security reasons, and not as a safeguard duty.
While the two countries were sparring at the WTO, Trump announced doubling the sectoral duties to 50 per cent to protect domestic industry from imports, which is likely to hit $4.56 billion worth of annual exports from India, mainly from the engineering sector.
“Our government must discuss the tariffs during the ongoing engagement over BTA. As we understand, the scope of BTA only includes seeking concession from reciprocal tariffs which is in abeyance. But the sectoral tariff is already in place and set to double,” Pankaj Chadha, chairman of the Engineering Export Council of India, said on Monday.
The options before India include launching a formal WTO dispute, not under the Safeguards Agreement but under broader GATT rules, challenging the Section 232 tariffs as disguised protectionist actions.
India could also argue that the US is abusing the national security exception. However, this legal route carries risks, as the US has a history of ignoring WTO rulings on national security and could appeal any adverse decision into the WTO Appellate Body, which remains non-functional and unable to enforce outcomes.
A stronger approach would be for India to impose retaliatory tariffs on its own, even without WTO authorisation. Other countries like the EU, Canada and China have done this against the US Section 232 tariffs as a political signal of resistance. “We can say that if you withdraw the concessions, we may also not be able to offer concessions,” Chandha argued.
Ajay Srivastava, founder of Global Trade Research Institute, concurred with Chadha that India should take a pragmatic route by using the ongoing BTA talks with the US as the platform to settle the issue.
“India could secure a negotiated solution that addresses its concerns while avoiding the lengthy and uncertain process of legal action or retaliation. This approach would allow India to use its negotiating leverage to gain meaningful market access benefits without escalating the dispute through trade or legal fights at this stage,” Srivastava said.
Trump had originally imposed a 25 per cent tariff on steel and 10 per cent on aluminium in 2018. India retaliated by imposing similar tariff on 28 American products in 2019. When Prime Minister Narendra Modi met US President Joe Biden in 2023, the US agreed to exempt 80 per cent of items (by value) for India which in turn withdrew retaliatory tariff on US products.
Trump reintroduced them earlier in March and raised tariff on aluminium to 25 per cent from 10 per cent.