Geo Political
Miloshan Dilruksha
India has taken a firm stance against the United States’ 25% steel and aluminum tariffs by notifying the World Trade Organization (WTO) of its intention to impose retaliatory tariffs on select American goods. This move highlights the escalating trade tensions between the two economic giants and reflects India’s determination to protect its exporters and domestic industries.
The $7.6 Billion Export Challenge
The US tariffs impact roughly $7.6 billion worth of Indian exports, with an estimated $1.91 billion in duties collected by the US government. Key sectors vulnerable to these tariffs include chemicals, metal products, jewelry, automobiles, pharmaceuticals, and agriculture. The potential damage is significant, with economists warning that a uniform tariff hike could reduce India’s GDP by up to 0.6%, primarily due to declining exports.
Impact on India’s Steel Industry
While only 1-2% of India’s finished steel exports go to the US, the tariffs disrupt global steel supply chains. Analysts predict that steel shipments from Japan and South Korea could be redirected to India, increasing competition and driving down domestic prices. Indian steel producers face challenges from reduced scrap availability and heightened competition, prompting calls for safeguard duties to protect the sector.
The WTO Dispute: Safeguards vs. Security
At the heart of the dispute is the classification of the US tariffs. India argues they are safeguard measures requiring proper notification and consultation under WTO rules, while the US claims they are national security measures exempt from such obligations. This disagreement has stalled consultations, pushing India to prepare for retaliatory tariffs that could take effect as early as June 2025.
What’s Next?
As trade talks continue, this dispute underscores the complexities of global trade relations and the balancing act countries must perform between protecting domestic industries and maintaining open markets. India’s assertive response signals its readiness to defend its economic interests on the world stage.
Stay tuned for updates on this evolving trade story!
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