India has notified the World Trade Organization (WTO) of its intention to impose retaliatory tariffs on \$1.9 billion worth of imports from the United States, targeting farm produce, petrochemicals, and medical devices. This action is in response to the US raising import duties on steel and aluminum, a move that India considers inconsistent with international trade agreements.
The communication from the WTO indicates that India's reciprocal measures could take effect 30 days after the notification date of May 9, 2025. India asserts that the US measures affect \$7.6 billion worth of imports into the United States from India, resulting in \$1.91 billion in duty collection. Consequently, India's proposed suspension of concessions would aim to collect an equivalent amount of duty from products originating in the US.
India has stated it will inform the Council for Trade in Goods and the Committee on Safeguards of the WTO regarding its next steps. This is not the first time India has resorted to such measures. In June 2019, India imposed higher tariffs on 28 US products after the US removed India from its Generalised System of Preferences (GSP) and refused to discontinue its 2018 steel and aluminum tariffs. These duties, covering \$240 million in trade value, were withdrawn in September 2023 following Prime Minister Narendra Modi's visit to Washington.
The current proposal assumes significance as both countries are engaged in negotiations for a bilateral trade agreement (BTA). However, this retaliatory measure could potentially strain the ongoing trade talks. Experts suggest that while India aims to finalize the agreement by the fall, this action might cast a shadow over the negotiations.
The US tariffs on steel and aluminum, initially imposed in March 2018, were extended in January 2020 and revised in February 2025. India views these measures as inconsistent with the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards (AoS). India argues that the US did not hold mandatory consultations as required, thus justifying its right to retaliate.
According to reports, sectors such as chemicals, metal products, and jewelry are most vulnerable to the impact of these tariffs. Automobiles, pharmaceuticals, and food products also face significant exposure. India's merchandise exports to the United States in 2024 included \$8.5 billion in pearls, gems, and jewelry, \$8 billion in pharmaceuticals, and approximately \$4 billion in petrochemicals.
Despite these trade tensions, India is also seeking to enhance its economic relationships with other global partners, including the European Union, China, and Russia, to offset potential losses from reduced access to the US market. This move could potentially diminish American economic influence.
Furthermore, India is aiming to position itself as a viable manufacturing alternative to China by offering incentives such as tax reductions and land accessibility in states like Andhra Pradesh, Gujarat, and Tamil Nadu across sectors including semiconductors, electronics, aircraft components, and renewables.
