Trade Tensions Rise: India Faces Setback as US Doubles Steel and Aluminum Duties
This development, reported by MoneyControl, could jeopardize the first phase of the much-anticipated Bilateral Trade Agreement (BTA).
Efforts to finalize a “mini-trade deal” between India and the United States by July 8 are facing a significant roadblock, as Washington continues to withhold exemption from the newly imposed 50% tariffs on steel and aluminum imports. This development, reported by MoneyControl, could jeopardize the first phase of the much-anticipated Bilateral Trade Agreement (BTA).
Table of Contents
India Seeks Relief Before July 9
India is aiming to conclude the initial phase of a three-part trade deal before country-specific tariffs, including a 16% levy on Indian exports, kick in on July 9. The 50% tariffs, a sharp increase from the previous 25%, could severely impact India’s metal exports to the US, which totaled $4.56 billion in FY25.
An unnamed official cited by MoneyControl expressed concern that “the US is not yet ready to offer a complete exemption,” adding that ambiguity also surrounds the 10% baseline tariff, which remains active across all imports.
Also Read: Trump’s World: The President Who Plays by His Own Rules
US Tariff Strategy Unchanged
While the country-specific duties are deferred until July 8, the 10% baseline tariff imposed on all steel and aluminum imports continues to be enforced. India has pushed for complete exemption, but the US has so far held firm on its trade protection stance.
Adding to the strain, the US not only dismissed India’s appeal to the WTO on May 13 but also doubled tariffs to 50% starting June 9 for all countries.
India’s Retaliatory Steps
India initially challenged the US’s 25% tariffs at the World Trade Organization (WTO) and has now proposed retaliatory duties in response to the new hike. However, with the US rejecting India’s latest notice, New Delhi’s options remain limited unless a breakthrough is achieved through bilateral talks.
What’s at Stake in the Trade Deal?
The India-US trade agreement is structured to roll out in three phases, with the current negotiations focusing on the preliminary stage. This phase could potentially offer greater market access for industrial and agricultural products, while also addressing non-tariff barriers like strict quality checks.
According to Bloomberg, officials noted that the final phase, which involves a comprehensive deal requiring US Congressional approval, may only be realized next year.
Historical Context and Urgency
India was among the earliest to start trade talks with the US following Prime Minister Modi’s visit to the White House during the early phase of President Trump’s tenure. Both sides had expressed commitment to strengthening trade ties, aiming to wrap up the first phase of the agreement by fall 2025.
Now, with just weeks left before the tariff deadline, negotiators are racing against time to salvage the deal’s first leg and prevent significant damage to India’s export interests.
Disclaimer: Trade policies and negotiations are subject to change. Investors and stakeholders are advised to follow official government updates for the latest information.
