U.S. Reinstates Steel and Aluminum Tariffs Citing "National Security"

In March 2025, the Trump administration unexpectedly reimposed a 25% tariff on imported steel and aluminum, reviving a policy initially introduced during his first term in 2018. According to documents submitted to the World Trade Organization (WTO), India alone is affected with up to $7.6 billion worth of goods now subject to the tariff, amounting to approximately $1.9 billion in duties.

New Delhi quickly requested consultations under the WTO’s Agreement on Safeguards (SG), but the U.S. rejected the request, arguing the tariffs were not “safeguard measures” but rather actions taken for “national security” reasons.

This invocation of national security to bypass international trade rules has long been controversial within the WTO framework and raises concerns that it could set a precedent for other countries to erect trade barriers under similar justifications.

Potential Tariffs on U.S. Goods, Threatens to Withdraw WTO Concessions

On May 12, 2025, India notified the WTO that it is considering revoking trade concessions and commitments under WTO rules, in favor of imposing retaliatory tariffs on U.S.-origin goods.

While specific products have not yet been named, analysts see this as a preemptive move designed to apply pressure ahead of further bilateral trade negotiations.

This is not the first time trade tensions have flared between the two nations. In 2018–2019, the Trump administration’s tariffs on aluminum and steel triggered India’s retaliation with additional duties on 28 U.S. products, including almonds, apples, walnuts, and technology goods. These disputes were later resolved under President Joe Biden through dialogue and WTO mechanisms.

Risks to U.S.-India Trade Talks: Is the Window of Opportunity Closing?

Currently, Washington and New Delhi are negotiating a comprehensive free trade agreement, with hopes of finalizing the deal by this fall. However, India’s retaliation may derail the talks, according to experts.

Ajay Srivastava, founder of the Global Trade Research Initiative, warned:
“India reintroducing tariff threats in the middle of ongoing negotiations introduces greater uncertainty and reduces the likelihood of consensus on key terms.”

The U.S. has also expressed criticism, with former President Trump previously calling India “a tariff king” and accusing it of having “the highest tariffs in the world.” This rhetoric further diminishes hopes for a breakthrough trade deal between the two countries.

Impact on Global Steel and Aluminum Supply Chains: Limited Damage?

Despite the high U.S. tariffs, data from India’s Directorate General of Foreign Trade shows that the American market represents only about 3% of India’s steel exports. Major Indian steel producers such as JSW Steel, Vedanta, and Tata Steel have limited exposure to the U.S. market, ranging between 2–10%.

This relatively low dependency helps India mitigate risks from single-market exposure and accelerates its export diversification strategy. Recently, India signed a trade deal with the United Kingdom, under which 99.1% of Indian goods will enter the UK tariff-free.

Additionally, India introduced a temporary 12% tariff last month on low-cost steel imports—mainly from China—to protect its domestic manufacturers. This move reflects a broader restructuring of India's trade policy in the steel sector, balancing export growth with control over foreign imports.

Opportunities and Risks from the U.S.–India Trade Clash

For businesses and exporters worldwide, the U.S.–India trade standoff introduces new variables into the global trade environment. While it poses risks, it may also create opportunities—especially for third countries.

Opportunities:

• Market Redistribution: If the U.S. limits steel and aluminum imports from India, it may seek alternative suppliers, potentially benefiting ASEAN exporters such as Vietnam, Indonesia, or Malaysia.
• Agricultural Exports: Should India retaliate by taxing U.S. agricultural products (e.g., apples, almonds), competitors from Latin America, Southeast Asia, or Europe could gain market share.
• New Trade Partners: India’s push to diversify its trade partners opens doors for countries looking to expand into sectors like electronics, intermediate goods, and supporting industries.

Risks:

• Supply Chain Disruption: Sudden policy shifts between two major economies could indirectly affect the global flow of intermediate materials, especially for countries reliant on Indian or U.S. inputs.
• Trade Defense Actions: If the U.S. increases steel and aluminum imports from new sources, there's a higher risk of anti-dumping or safeguard investigations if import volumes surge unexpectedly.
• Delays in Other Trade Negotiations: The U.S. focusing on resolving tensions with India could deprioritize ongoing trade talks with other partners, including ASEAN nations or emerging economies.