Trade tensions between India and the United States have taken a sharp turn as Washington dismissed New Delhi’s notice at the World Trade Organization (WTO) regarding retaliatory tariffs on American imports. The issue, centered on steep US import duties on steel and aluminium, could soon escalate into a full-blown tariff battle if no diplomatic breakthrough is achieved.
What Sparked the Dispute?
In a move that surprised many, the US imposed a 25% tariff on steel and a 10% tariff on aluminium imports back in 2018, citing national security concerns under Section 232 of the Trade Expansion Act of 1962. Though this wasn’t new, what reignited tensions recently was a fresh notice from India to the WTO on May 9, 2025, signaling its intention to retaliate against these measures.
India’s move came after the US doubled down—literally—by increasing the tariffs to a staggering 50% as of June 4. This decision was made under the Trump administration’s claim of safeguarding national security, again brushing aside global concerns about unilateral tariff hikes.
India's Pushback at WTO
In response to the continued tariff escalation, India formally notified the WTO of its plan to suspend “concessions and other obligations” granted to the US. These concessions are part of previously agreed-upon trade rules, and India now considers them no longer justified.
India’s notification clearly stated its intent to apply retaliatory tariffs starting June 8, 30 days from the initial notice. Products like almonds, walnuts, and metal imports from the US are likely to be targeted for higher duties, in a tit-for-tat response aimed at balancing the trade impact.
According to India’s May 9 submission, the safeguard duties imposed by the US are expected to affect approximately $7.6 billion worth of Indian exports, resulting in a potential duty collection of $1.91 billion. Hence, India argues, it has every right to impose an equivalent duty on American products.
The US Response: A Flat Denial
The US has rebuffed India’s claims outright. On May 22, Washington informed the WTO that its tariffs are not safeguard measures, but national security measures. Therefore, it argues, India’s move to retaliate under the WTO’s Agreement on Safeguards is invalid.
“The United States will not discuss the Section 232 tariffs under the Agreement on Safeguards,” the US said, adding that there is no legal basis for India to suspend its obligations under WTO rules in this case.
This response essentially shuts down any formal dialogue at the WTO level, at least from the American side, and pushes the dispute into a more uncertain territory—either further escalation or eventual political negotiation.
India’s Options: Play Tough or Seek Compromise
Sources close to the matter suggest India may still go ahead with retaliatory tariffs unless the US offers preferential treatment on steel and aluminium exports in the ongoing bilateral trade talks. These talks aim to achieve an “early harvest” deal under the proposed Bilateral Trade Agreement (BTA). A US team is expected to visit India soon to try to resolve the matter before it further complicates broader trade relations.
What’s at Stake?
The stakes are high, especially for Indian exporters. In the fiscal year 2024–25, India exported roughly $4.56 billion worth of iron, steel, and aluminium products to the US. This includes:
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$587.5 million in raw iron and steel
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$3.1 billion in articles made of iron or steel
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$860 million in aluminium and related items
With sharply higher US tariffs now in place, these sectors are staring at thinner profit margins, reduced competitiveness, and possibly, reduced export volumes.
Ajay Srivastava, founder of Global Trade Research Initiative (GTRI) and a former Indian Trade Service officer, explains: “The impact on India is very direct. Higher US tariffs undermine our exporters’ ability to compete and risk significant losses for Indian manufacturers.”
Déjà Vu: A Familiar Dispute
Interestingly, this isn’t the first round in the India-US tariff saga. In 2018, the US imposed similar tariffs, which led India to retaliate in 2019 by slapping customs duties on 28 US products, including almonds and walnuts. That spat was eventually resolved in June 2023 under a Mutually Agreed Solution (MAS), where both sides made concessions.
The MAS allowed market access to Indian steel and aluminium through an exclusion process, while India dropped its retaliatory tariffs. However, the current developments risk undoing the progress made under that agreement.
What Lies Ahead?
In the absence of a functioning appellate body at the WTO, such trade disputes often end up being symbolic. But for industries and exporters, the costs are real and immediate.
India now faces a critical decision: Should it escalate the matter further with retaliatory tariffs, or wait for the results of the upcoming bilateral talks? Either way, this episode underscores the fragility of global trade norms in the face of growing economic nationalism and unilateral actions.
In an increasingly multipolar world, trade battles like this one are likely to become more common. Whether India and the US can find common ground—or whether this spirals into another prolonged trade war—remains to be seen.
