US tariff hike may not hurt India if govt manages to retain exemptions
11 Feb 2025 1:00 PM IST
After introducing a 25 per cent tariff on steel imports and 10 per cent on aluminum imports in 2018, Trump has now proposed a 25 per cent tariff for both metals on imports from all the markets
US President Donald Trump signed executive orders to impose 25 percent tariffs on steel and aluminum imports from March 12.
Chennai: US President Donald Trump’s plan to impose a 25 per cent tariff on steel and aluminum imports, will not have much impact on Indian industry if the government convinces the Trump administration to continue the tariff exemption for the products important for that market. While part of the industry believes that the US will use this to bring India to the negotiating table, some have recommended a blanket safeguard duty on steel and aluminum to curb dumping from China and FTA countries.
After introducing a 25 per cent tariff on steel imports and 10 per cent on aluminum imports in 2018, Trump has now proposed a 25 per cent tariff for both metals on imports from all the markets.
In FY19 and FY20, India saw a drastic fall in steel and aluminum exports, but the shipments rose sharply after the US provided exemptions in 2020 on products that were specifically needed for the US market. India got almost 70 per cent of the recommended products brought under the exemption, though for aluminum it was much less around 12.5 per cent. Along with the exemptions, the China-plus-one policy of the US also helped a surge in exports in FY21.
In FY19, steel imports dropped to $247 million from $370 million in the previous year and further declined to $170 million in FY20. It rose to $898 million in FY21 and was $909 million in FY23. But the demand crunch across the globe in FY24 saw exports declining to $475 million.
Steel products largely remained unaffected after the tariffs at around $1.6 billion exports annually, but saw a surge to $2.6 billion in FY21. Aluminum saw a drop in exports to the US in FY20 to $640 million from $790 million in the previous, but surged to $1.1 billion in FY21.
“We hope that the government will talk to the Trump administration and retain the exemptions and bring more aluminum products in the list,” said Saikat Dutta, director, policy, Engineering Export Promotion Council.
However, with the reduction in US exports, the threat of Chinese dumping of steel and aluminum remains despite the reports of Chinese going slow on its capacity utilization. “The government is also studying on introducing safeguard tariffs on steel and aluminum, which could protect it from the dumping from China and exports through ASEAN bloc and Japan using FTA,” said Dutta.
According to Ajay Sahai, director general of FIEO, the Trump administration is trying to bring India to the negotiation table to get concessional or free imports of certain products. “In the Budget we have already lowered tariffs on several products that are of US interests. Hence, we look forward to a positive outcome of the talks between the countries,” he said.
( Source : Deccan Chronicle )
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