The US’s new 50% tariffs on steel and aluminum, effective June 4, could disrupt India’s metal exports, impacting competitiveness and profitability in a key market.
Washington, D.C.: President Donald Trump’s decision to escalate tariffs on steel and aluminum imports to 50% is poised to deliver a significant blow to Indian exporters, with $4.56 billion in metal exports at risk, according to a recent analysis by the Global Trade Research Initiative (GTRI). The tariff hike, set to take effect on June 4, 2025, aims to protect US industries but may erode India’s market share in the world’s largest economy.
Impact on Indian Exports
In FY2025, India exported $587.5 million in iron and steel, $3.1 billion in iron or steel products, and $860 million in aluminum and related items to the US. These sectors, critical to India’s export economy, now face higher costs that could undermine their competitiveness. The GTRI report warns that the tariff increase will likely raise production costs for Indian manufacturers, squeezing profit margins and potentially reducing demand in the US market.
National Security Justification
The tariff hike, justified under Section 232 of the US Trade Expansion Act of 1962, cites national security concerns as the basis for restricting imports. This follows a similar move in 2018 when Trump imposed 25% tariffs on steel and 10% on aluminum, later adjusting aluminum tariffs to 25% in February 2025. The new 50% rate is expected to push US steel prices above $1,180 per tonne, impacting industries like automotive, construction, and manufacturing, which rely heavily on affordable raw materials.
India’s Response and Global Implications
India has notified the World Trade Organization (WTO) of the tariff hike and is exploring retaliatory measures to safeguard its interests. Experts suggest India could impose counter-tariffs on US goods, such as agricultural products or pharmaceuticals, to offset losses. “The tariff escalation risks sparking a broader trade conflict, which could disrupt global supply chains,” said Dr. Arjun Mehra, a trade policy analyst at the Indian Institute of Foreign Trade.
Environmental Concerns Raised
The GTRI report also highlights the environmental fallout of the US policy. Steel and aluminum production are among the largest sources of global carbon emissions. While countries like India and the EU are investing in greener manufacturing processes, the US tariff strategy lacks environmental considerations. “This move prioritizes economic nationalism over global climate goals,” GTRI noted, raising concerns about the US’s commitment to sustainable industrial practices.
Broader Economic Context
The tariff hike comes amid rising global trade tensions. A 2024 study by the International Monetary Fund estimated that escalating trade barriers could reduce global GDP by up to 1.4% by 2030. For India, the US remains a vital market, accounting for nearly 17% of its total exports in 2024. The steel and aluminum sectors employ over 2 million workers in India, and any decline in exports could have ripple effects on jobs and economic growth.
Looking Ahead
As India weighs its response, analysts predict negotiations with the US to mitigate the tariff’s impact. “India may push for exemptions or trade concessions, leveraging its strategic partnership with the US,” said Rhea Kapoor, an economist at the Delhi-based Center for Trade Studies. However, with Trump’s administration doubling down on protectionism, Indian exporters face an uphill battle to maintain their foothold in the US market.