India’s Tariff Threat On US Steel Duties May Strain Trade Talks: GTRI

New Delhi, May 14 (KNN) India has formally notified the World Trade Organisation (WTO) of its intention to suspend trade concessions granted to the United States, potentially imposing retaliatory import duties on certain American products.

This development could negatively affect ongoing negotiations for a bilateral trade agreement between the two nations, according to the Global Trade Research Initiative (GTRI).

The notification, issued on May 12, comes in response to US safeguard duties on steel, aluminium, and derivative products. While India has not yet disclosed which items would face increased tariffs, a similar action in 2019 had targeted 28 US products including almonds, apples, and various chemicals.

GTRI Founder Ajay Srivastava noted that the situation could be resolved if the US engages in consultations with India on the matter or withdraws tariffs.

However, without resolution, India's retaliatory measures could take effect in early June, potentially deepening trade frictions between the two countries.

India's decision invokes rights under the WTO Agreement on Safeguards (AoS), which permits a country to retaliate when another member imposes safeguard measures without proper notification or consultations.

India had sought consultations with the US in April, but Washington maintained that the tariffs were imposed on national security grounds and should not be classified as safeguard measures.

According to the WTO notification, US duties impact approximately USD 7.6 billion worth of Indian exports, resulting in an estimated USD 1.91 billion in additional duties collected by America. India intends to recover this amount through its retaliatory actions on selected American products.

The dispute centres on US tariffs on steel and aluminium imports originally imposed in 2018 on national security grounds and subsequently renewed multiple times.

The latest extension was enacted via US Presidential Proclamations dated February 10, 2025, effective March 12 this year.

This is not the first such dispute between the two nations. In June 2019, India imposed higher tariffs on 28 US products after the United States removed India fr0m its Generalised System of Preferences (GSP) while maintaining steel and aluminium tariffs.

Those duties were later withdrawn in September 2023 following Prime Minister Narendra Modi's state visit to Washington, when both countries agreed to resolve six ongoing WTO disputes.

Currently, both nations are negotiating a bilateral trade agreement, with an Indian delegation visiting the United States this week for trade talks.

The timing of India's WTO notification adds complexity to these discussions, potentially affecting the broader trade relationship between the two major economies.

(KNN Bureau)