Global Trade on Edge! Donald Trump’s Fresh Tariff Threat on Steel and Aluminum Raises Concerns, Will It Impact Indian Businesses?

US President Donald Trump has announced a 25% tariff on all steel and aluminum imports, a decision that could have far-reaching effects on global trade. India, being a major exporter of these metals to the US, may face significant challenges. But how may this tariff impact Indian businesses? Could it lead to reduced exports, increased costs or strained trade relations? While the full impact remains uncertain, Indian industries may need to prepare for potential disruptions. Let’s explore how this move may affect India’s steel and aluminum sector and what it could mean for the future.

Trump’s Tariff Announcement and Its Implications

Trump’s latest announcement follows his longstanding policy of using tariffs as a tool to protect American industries. Speaking while en route to New Orleans, he declared that steel and aluminum imports into the US would face a 25% tariff. He also hinted at introducing reciprocal tariffs on all countries that impose duties on American goods.

This decision comes just ahead of Prime Minister Narendra Modi’s scheduled visit to Washington, making it a critical point of discussion between the two nations. The Indian steel and aluminum industry, which exported steel worth $4 billion and aluminum worth $1.1 billion to the US in 2023, may face disruptions due to this move.

Impact on Indian Steel and Aluminum Industry

India’s metal exports have been a subject of debate between Washington and New Delhi. The US has previously accused India of subsidising its steel and aluminum exports, leading to disputes at the World Trade Organisation (WTO).

While some of these disputes were settled in 2023, the US had already imposed duties of up to 39.5% on certain aluminum imports in October. Trump's latest decision adds further uncertainty, as it remains unclear how the new 25% tariff will be applied to existing duty structures.

India-US Trade Relations: A History of Tariffs and Agreements

India and the US have had a complicated trade relationship, with both countries imposing and rolling back tariffs over time.

• In the final days of President Joe Biden’s administration in January, the US agreed to waive certain additional tariffs that Trump’s first administration had imposed, ranging from 10% to 25%. A joint mechanism was set up to monitor exports.
• In return, India reduced tariffs on agricultural imports from the US, including apples, walnuts, and almonds.
• India’s total exports to the US stood at $87.4 billion last year, while imports from the US were $47.8 billion. The trade surplus in India's favour has often been a point of contention for Trump.

Trump’s Stance on Trade and India's Position

Trump has repeatedly criticised trade imbalances and has pushed for higher tariffs to reduce the US trade deficit. During his first term, he had called India a "Tariff King," citing high import duties on American goods such as Harley-Davidson motorcycles.

While India has made symbolic reductions in tariffs on heavier Harley-Davidson models—from 50% to 30%—Trump’s latest tariff threat signals that trade tensions could rise again. Indian businesses relying on steel and aluminum exports may have to look for alternative markets or negotiate exemptions to sustain profitability.