India wants to keep the option of retaliation open against the US at the WTO in case the ongoing bilateral trade agreement (BTA) talks don’t result in a favourable outcome on America’s sectoral tariffs on steel and aluminium imports. New Delhi, however, will refrain from initiating any action against the US while the trade talks are on, a source tracking the matter told businessline.

“It is not the right thing to impose retaliatory tariffs right now on the US while the BTA talks are on and all issues are on the table, including the sector-specific tariffs. But India wants the option of retaliation open as it does not know what the outcome of the talks would be,” a source tracking the matter told businessline.

When 25 per cent tariffs on steel and 10 per cent on aluminium were imposed in 2018 during US President Donald Trump’s first stint, a year later India levied reciprocal tariffs on 28 products exported by the US, including apples, walnuts and lentils. Most of these duties were rolled back in 2023 when the Biden regime partly lifted the duty restrictions on India through quotas.

For the moment, India and the US are hard at work to reach an interim trade deal by July 9, 2025, when the 90-day pause period on reciprocal tariffs announced by US President Donald Trump would end. 

Trade push

New Delhi is not just focused on getting the 26 per cent reciprocal tariffs, including the 10 per cent baseline levies, reversed; it also wants the sectoral tariffs on steel & aluminium and automobiles to be addressed, the source said. The full deal is likely to be finalised by Fall 2025.

On March 12, 2025, the US applied a 25 per cent tariff on imports of steel and aluminium products from all countries, including India, which it increased to 50 per cent from June 4.

Duty dispute

Last month, India complained to the WTO against the tariffs, arguing that these were safeguard measures wrongly applied. Per India’s calculations (based on 25 per cent duties) submitted to the WTO, the safeguard measures would affect $7.6 billion of exports from India to the US, on which the duty collected would be $1.91 billion. New Delhi proposed to suspend concessions on US goods of equivalent amount of duty.

India also complained to the WTO against the US duties of 25 per cent imposed on automobiles and auto parts, but has not yet threatened retaliation. The US, in both the cases of steel & aluminium and automobiles, maintained that the tariffs were imposed on national security grounds.

“Things are, however, not so clear on how the negotiations would progress in the absence of a template. The UK-US FTA, agreed to recently, gives mixed indications,” an industry source said. While the US agreed to bring down tariffs on automobiles exported by the UK to 10 per cent from 25 per cent, subject to a quota, there is not much clarity yet on the concessions being extended on steel & aluminium.

Published on June 25, 2025