India has proposed retaliatory tariffs on select goods from the United States in response to U.S. tariffs on steel and aluminum products. This move comes as both countries are engaged in ongoing negotiations for a bilateral trade agreement (BTA).

Background

In March 2018, the U.S. imposed safeguard measures on some aluminum and steel products, with tariffs of 10% and 25% ad valorem, respectively. These measures were extended in January 2020 and revised again in February 2025 for an unlimited duration. In June 2019, India responded by imposing customs duties on 28 U.S. products, including almonds and walnuts and also filed a complaint in the WTO.

The Current Proposal

India has notified the World Trade Organization (WTO) of its intention to suspend concessions or other obligations in response to the U.S. tariffs. The proposal, dated and received on May 9, 2025, is being circulated at the request of the Indian delegation. The proposed suspension of concessions would take the form of an increase in tariffs on selected products originating in the U.S. According to the WTO, the U.S. safeguard measures affect imports of relevant products worth $7.6 billion into the U.S. from India, with estimated duty collection reaching $1.91 billion. India's proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in America.

India's Rationale

India maintains that the measures taken by the U.S. are not consistent with the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards. India had earlier requested consultations with the U.S. under the WTO's safeguard agreement, but the U.S. responded that the tariffs were imposed on national security grounds and should not be regarded as safeguard measures.

Next Steps

India will inform both the Council for Trade in Goods and the Committee on Safeguards of its next steps and has also taken up the tariff issue bilaterally. If the U.S. engages in consultations with India or withdraws the tariffs, a resolution may be reached. Otherwise, India's retaliatory import duties could take effect in early June, potentially impacting U.S. exporters and deepening trade frictions.

Potential Impact

The imposition of retaliatory tariffs by India could strain trade relations between the two countries and cast a shadow over ongoing negotiations for a trade agreement. The specific U.S. products that will be subject to the retaliatory tariffs have not yet been disclosed. However, in a similar move in 2019, India imposed retaliatory tariffs on 28 U.S. products, ranging from almonds and apples to chemicals.

Historical Context

In the past, the U.S. has also imposed retaliatory tariffs on all U.S. exports. Under President Joe Biden, India and the U.S. had agreed to end the duty dispute, resolving seven WTO disputes through negotiations.