GTRI Warns: Doubling of US Tariffs on Steel, Aluminium to Impact Indian Exporters
The Global Trade Research Initiative (GTRI) has raised concerns over the United States’ recent decision to double tariffs on steel and aluminium imports, emphasizing the potential adverse effects on Indian exporters. This move, announced by former U.S. President Donald Trump, is part of a broader strategy to protect domestic industries but has significant implications for global trade dynamics, particularly for countries like India.
Understanding the Tariff Hike
On May 31, 2025, former President Donald Trump declared an increase in tariffs on steel and aluminium imports from 25% to 50%, effective June 4, 2025. This decision follows a federal appeals court ruling that reinstated Trump’s global tariffs, allowing him to continue using emergency powers to impose such measures while litigation progresses.
Trump justified the tariff hike as a means to bolster American industries and prevent foreign competitors from undercutting U.S. manufacturers. He specifically targeted countries like China, accusing them of violating previous trade agreements.
Implications for Indian Exporters
India, as a significant exporter of steel and aluminium to the U.S., stands to be notably affected by these increased tariffs. The GTRI warns that the doubling of tariffs could lead to a substantial decline in India’s exports to the U.S., particularly in sectors heavily reliant on these metals.
According to GTRI’s analysis, the contraction will be led by a drop in exports of fish and crustaceans, which may fall by a fifth. Exports of iron and steel products may decline by 18%, diamonds and related products by 15.3%, vehicles and parts by 12.1%, and electrical, telecommunications, and electronic products by 12%.
The increased tariffs are expected to make Indian steel and aluminium products less competitive in the U.S. market, potentially leading to a loss of market share to other countries not subjected to such high duties.
GTRI’s Recommendations
In light of these developments, the GTRI advises Indian exporters to exercise caution and adapt their strategies accordingly. Key recommendations include:
- Diversification of Markets: Indian exporters should explore alternative markets beyond the U.S. to mitigate the risks associated with over-reliance on a single market.
- Enhancing Value Addition: By focusing on value-added products, Indian exporters can differentiate their offerings and potentially command better margins, offsetting the impact of higher tariffs.
- Compliance with Trade Regulations: GTRI emphasizes the importance of adhering to international trade norms and avoiding practices like re-routing goods from high-tariff countries through India to the U.S., which could invite penalties under U.S. trade laws.
- Engagement in Policy Dialogues: The Indian government and industry stakeholders should actively engage in dialogues with U.S. counterparts to seek exemptions or negotiate more favorable trade terms.
Broader Trade Dynamics
The tariff hike is part of a broader pattern of protectionist trade policies adopted by the U.S. in recent years. Such measures have led to increased volatility in global trade and have compelled countries like India to reassess their trade strategies.
GTRI’s analysis suggests that India’s exports to the U.S. could decline by approximately $5.76 billion in 2025 due to the high tariffs. This projection underscores the urgency for Indian exporters and policymakers to adapt to the evolving trade landscape.
Conclusion
The doubling of U.S. tariffs on steel and aluminium imports presents a significant challenge for Indian exporters. While the immediate impact is concerning, it also offers an opportunity for India to diversify its export markets, enhance value addition, and strengthen compliance with international trade norms. Proactive engagement with global trade partners and strategic policy adjustments will be crucial in navigating this complex trade environment.
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