India weighs 3 options as US doubles safeguard duties on steel, aluminium

Retaliation, WTO action, or talks - three options on the table

India is considering three options after the US doubled steel and aluminium safeguard duties to 50 per cent, further straining bilateral trade ties.

 

“At present, there are three options on the table. We can press that the US measure is a safeguard duty and impose retaliatory tariffs. Since the US disagrees, it may retaliate. This can go on and on potentially. India can also file a dispute at the World Trade Organization (WTO), like some other countries. We can also continue to talk bilaterally and arrive at some arrangement. These are the full set of options. We are yet to take a final call,” a government official said.

 

Commerce and Industry Minister Piyush Goyal told reporters in Paris that the two countries will continue to work together to resolve such issues bilaterally.

 

“Let us wait and watch ... both the US and India share good relations, and we will continue to work together to resolve all these issues bilaterally,” he said.

 

On May 9, India submitted a formal notification to the WTO under the Agreement on Safeguards, informing the multilateral trade body of its intention to suspend concessions under the agreement in response to the tariffs imposed by the US on steel, aluminum, and their derivative products.

 

India’s position was that the US tariffs — imposed under Section 232 of the US Trade Expansion Act of 1962 — amounted to safeguard measures under WTO rules, entitling India to withdraw equivalent concessions. 

 

India said the safeguard measures by the US would affect $7.6 billion of exports by India to America, on which the duty collected by Washington would be $1.91 billion.

 

“Accordingly, India’s proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the US,” the notification added.

 

However, the US made clear that it would not discuss the tariffs under the Agreement on Safeguards, insisting they are national security measures, not safeguard actions.

 

Ajay Srivastava, founder of the New Delhi-based think tank Global Trade Research Initiative, said even though India has several legal and diplomatic options, it may choose not to act immediately.

 

“Instead, India could take a pragmatic route by using the ongoing bilateral free trade agreement (FTA) negotiations with the US as the main platform to settle the issue. By pushing the US to eliminate or reduce the Section 232 tariffs on steel and aluminum as part of the FTA deal, India could secure a negotiated solution that addresses its concerns while avoiding the lengthy and uncertain process of legal action or retaliation,” he added.

 

India had imposed retaliatory tariffs on 28 US products — ranging from almonds and apples to chemicals — in June 2019 after Washington removed India from its Generalized System of Preferences (GSP) and continued its steel and aluminium tariffs. That action, which covered about $240 million in trade value, marked India’s first use of WTO-sanctioned retaliation. The duties were withdrawn in September 2023 after both countries agreed to resolve six ongoing WTO disputes, including this one.

 

Inputs from PTI