Indian companies take a cautious stance on US reciprocal tariff moves

India exported about $6.79 bn worth of auto parts to US in 2023-24. Overall auto component exports stood at $21.2 bn, while imports from US were $1.63 bn of total $20.9 bn in auto component imports

Indian companies and trade organisations are adopting a cautious approach, watching and waiting to see how the situation unfolds following US President Donald Trump’s threats to impose reciprocal tariffs on Indian exports to the US.

 

India runs a trade surplus with the US at $45 billion in calendar year 2024, according to Morgan Stanley, making it the seventh-largest trade surplus among nations that have a trade surplus with the US. Some industries likely to be affected by the reciprocal tariff include automobile (auto) components, steel, pharmaceuticals, and textiles, say analysts.

 

Vinnie Mehta, director-general of the Automotive Component Manufacturers Association of India (ACMA), says the auto components industry in India is keenly watching developments around the reciprocal tariff. “As such, competitiveness is relative — our competitiveness will also depend on the tariffs imposed on our competitors. So nothing is clear at this moment as the situation is evolving,” Mehta said.

 

India exported about $6.79 billion worth of auto parts to the US in 2023-24. Overall auto component exports stood at $21.2 billion, while imports from the US were about $1.63 billion of the total $20.9 billion in auto component imports.

 

The steel sector is also worried about the impact of reciprocal tariffs, fearing increased dumping into India from China.

 

Naveen Jindal, president of the Indian Steel Association (ISA) and promoter of Jindal Steel & Power, expressed deep concern over the US decision to impose tariffs on steel imports, a move he said would further disrupt global trade and intensify challenges for the steel industry.

 

"The recent 25% U.S. tariff on steel puts all exporting nations on equal footing, creating an opportunity for India to strengthen its position in the trade landscape. We remain optimistic that decades-old ADD / CVD of more than 100% on Indian carbon steel imports will get re-visited by US authority and India with a basket of high quality steel capabilities will replace China and others in the US market," said Naveen Jindal, President, Indian Steel Association. 

India’s carbon steel exports to the US are already negligible due to longstanding anti-dumping duty (ADD) and countervailing duty (CVD) measures. “Yet, this decision will only add to the misery and aggravate the situation further. With the US shutting its doors on global steel, the surplus will inevitably be redirected to India, threatening our domestic industry with market distortions, price crashes, and unfair competition,” Jindal said.

 

The ISA urged the Government of India to take urgent diplomatic action to push for the removal of longstanding ADD and CVD duties and secure exemptions from restrictive measures.

 

According to a BNP Paribas analyst, an increase in tariffs by the US could lead to a rise in steel imports into India, exerting downward pressure on Indian steel prices. “We note that Indian policymakers are also contemplating a 25 per cent duty on steel imports. However, no decision has been made in this regard,” the analyst said.

 

Hemant Jain, president of industry lobby body PHD Chamber of Commerce and Industry, said India and the US have a resilient and steady trade trajectory, with the US being India’s largest trade partner for many years. “Merchandise trade between India and the US has grown robustly over the past decade,” he said.

 

Given India’s robust economic growth, strategic importance, and changing global geopolitical dynamics, Jain expects continued collaboration and stronger bilateral trade relations between India and the US.

 

“We don’t see any stringent rise in tariffs, as bilateral trade is always a proper give-and-take between economies. Since the US is also a big exporter to India, bilateral tariff hikes would impact the overall trade trajectory and would not be beneficial for either economy,” he said.

 

India is a large consumer market with diversified trade across emerging partners in West Asia, South Africa, and Latin America, along with strong trade ties with Asian countries. A knee-jerk reaction, Jain warned, would not be beneficial for any economy.

 

“India has many options for diversifying its trade trajectory further, as demand for Indian products has gained pace in recent years due to price competitiveness and supply efficiencies,” Jain said.