The United States has rejected a formal notice sent by India to the World Trade Organisation (WTO) on May 9. In that notice, India had said it may take retaliatory action against the US for increasing import duties on steel and aluminium. The US said it will not hold any discussion with India on this matter because the increased tariffs are not “safeguard measures”.

Safeguard measures are emergency steps taken by a country to protect its local industry from a sudden increase in imports. But the US has told the WTO that its tariffs are not for that reason. It said, “The United States will not discuss the Section 232 tariffs under the Agreement on Safeguards, as we do not view the tariffs as a safeguard measure.”

The US first imposed a 25% import duty on steel and aluminium from all countries, including India, on February 10. These duties started from March 12. Then, on May 30, the Trump administration doubled the tariffs to 50%, saying it was important for national security. This made the situation worse for countries exporting metals to the US, especially India.

In reply, India said it may suspend “concessions and other obligations” given to the US under WTO rules. India said this suspension could begin 30 days after the notice, that is, from June 8.

India’s notice explained how much the US tariffs could impact Indian exports. It said, “The safeguard measures would affect US$ 7.6 billion in imports into the United States of the relevant products originating in India, on which the duty collection would be US$ 1.91 billion. Accordingly, India’s proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the United States.”

But the US responded on May 22 by saying India’s plan for retaliation was not right under WTO rules. It said, “Accordingly, there is no basis for India’s proposal to suspend concessions or other obligations under Article 8.2 of the Agreement on Safeguards with respect to these measures.”

India may raise tariffs on US goods like almonds and walnuts

Even though the US has refused to talk on the issue, India may still go ahead and raise duties on some US products. According to people familiar with the situation, India may increase tariffs on items like almonds and walnuts and suspend trade benefits given to the US.

One person said India could act unless the US offers some special relief for Indian steel and aluminium under ongoing talks for a Bilateral Trade Agreement (BTA). Both countries are in talks to sign an early harvest trade deal. A team from the US is expected to visit India this week to continue negotiations.

Experts say these high US tariffs are a serious concern for Indian businesses. Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI) and a former Indian Trade Service officer, said, “For India, the consequences are direct. In FY25, India exported $4.56 billion worth of iron, steel, and aluminium products to the US, with key categories including $587.5 million in iron and steel, $3.1 billion in articles of iron or steel, and $860 million in aluminium and related articles. These exports are now exposed to sharply higher US tariffs, threatening the profitability of Indian producers and exporters.”

He added, “India has already issued a formal notice at the WTO signalling its intention to impose retaliatory tariffs on US goods in response to the earlier steel tariffs. With (President Donald) Trump now doubling the tariffs, it remains to be seen whether India will carry out the retaliation by increasing tariffs on certain US exports within a month.”

This is not the first time such a dispute has happened. In 2018, during Joe Biden’s earlier term, the US also imposed tariffs of 25% on some steel and 10% on aluminium. India then responded in 2019 by raising duties on 28 US products, including almonds and walnuts. India also filed a complaint at the WTO.

However, both sides later decided to solve the issue peacefully. In June 2023, they reached a mutual agreement. The US agreed to allow Indian steel and aluminium under its exclusion process, and India agreed to remove its extra tariffs on US goods. Such peaceful solutions are part of a system at the WTO called “mutually agreed solutions” (MAS), where countries resolve problems without going through a full legal fight.

One expert said, “Such disputes at the WTO are common and routine. Without an effective appellate body at the multilateral forum, disputes have no real significance.” Another person said the issue is “vexed”, meaning it is difficult and complex.

For now, all eyes are on whether India will go ahead with its threat and raise tariffs on American goods starting June 8.

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