India seeks trade retaliation after US rejects WTO Notice

NEW DELHI : India’s trade tensions with the United States have escalated sharply after Washington outright rejected a formal notice issued by New Delhi at the World Trade Organization (WTO) seeking retaliatory measures. The notice, filed by India on May 9, came in response to the US government’s decision to impose steep import duties on steel and aluminium — initially set at 25% and now doubled to 50% effective June 4.

Citing national security, the US has classified these tariffs under Section 232 of the Trade Expansion Act of 1962. India, however, maintains that the tariffs qualify as “safeguard measures” under WTO rules and should, therefore, be subject to dispute resolution and reciprocal concessions. The US, in its reply to WTO on May 22, dismissed India’s claim and refused to entertain any dialogue under the Agreement on Safeguards, arguing that the tariffs do not fall within that legal framework.

This categorical rejection has left India with limited options. Sources within the government suggest that New Delhi is seriously considering retaliatory action — including imposing higher import duties on American goods such as almonds, walnuts, and certain metal products. These measures could take effect as early as June 8, in line with the 30-day window mentioned in India’s WTO notice.

Trade Stakes: A Battle of Numbers and Strategy
India’s economic exposure in this dispute is significant. In FY25, exports of iron, steel, and aluminium products to the US totalled around $4.56 billion. Of this, aluminium and related products made up nearly $860 million, while articles of iron and steel crossed the $3.1 billion mark. With the US now levying up to 50% import duties, Indian exporters face a considerable threat to margins and market share.

Ajay Srivastava, former Indian Trade Service officer and founder of the Global Trade Research Initiative, noted, “India had already signalled its intent to retaliate based on WTO provisions. With tariffs now doubled by the US, the Indian government may not hold back much longer.”

New Delhi’s WTO submission calculated that the US safeguard tariffs could affect Indian exports worth $7.6 billion annually, leading to an estimated $1.91 billion in additional duty collection by the US. India’s proposal, therefore, aims to impose equivalent retaliatory duties on US-origin goods.

Political Undercurrents and Diplomatic Calculations
While the commerce ministry has not officially commented, insiders believe that India may still consider a negotiated outcome — especially as discussions continue for a limited trade deal or “early harvest” agreement. A US trade delegation is expected to visit India this week, and progress in those talks could shape India’s next move.

This isn’t the first time India and the US have clashed over metal tariffs. A similar episode unfolded during the Trump administration in 2018, prompting India to retaliate by levying duties on 28 US products and filing a complaint at the WTO. The standoff was eventually resolved in 2023 through a Mutually Agreed Solution (MAS), under which both sides made limited concessions without invoking WTO’s formal dispute settlement process.

Whether a similar détente is possible this time remains uncertain. Unlike 2023, there is now the added complication of higher tariffs, a stalled WTO appellate mechanism, and political pressures in both countries.

As the US stands firm on national security grounds and rejects India’s appeal for a multilateral discussion, the ball is now in India’s court. With its economic interests at stake and precedent in its favour, New Delhi must weigh the benefits of retaliation against the possibility of securing preferential treatment through backdoor diplomacy.

This categorical rejection has left India with limited options. Sources within the government suggest that New Delhi is seriously considering retaliatory action — including imposing higher import duties on American goods such as almonds, walnuts, and certain metal products. These measures could take effect as early as June 8, in line with the 30-day window mentioned in India’s WTO notice.

Trade Stakes: A Battle of Numbers and Strategy
India’s economic exposure in this dispute is significant. In FY25, exports of iron, steel, and aluminium products to the US totalled around $4.56 billion. Of this, aluminium and related products made up nearly $860 million, while articles of iron and steel crossed the $3.1 billion mark. With the US now levying up to 50% import duties, Indian exporters face a considerable threat to margins and market share.

Ajay Srivastava, former Indian Trade Service officer and founder of the Global Trade Research Initiative, noted, “India had already signalled its intent to retaliate based on WTO provisions. With tariffs now doubled by the US, the Indian government may not hold back much longer.”

New Delhi’s WTO submission calculated that the US safeguard tariffs could affect Indian exports worth $7.6 billion annually, leading to an estimated $1.91 billion in additional duty collection by the US. India’s proposal, therefore, aims to impose equivalent retaliatory duties on US-origin goods.

Political Undercurrents and Diplomatic Calculations
While the commerce ministry has not officially commented, insiders believe that India may still consider a negotiated outcome — especially as discussions continue for a limited trade deal or “early harvest” agreement. A US trade delegation is expected to visit India this week, and progress in those talks could shape India’s next move.

This isn’t the first time India and the US have clashed over metal tariffs. A similar episode unfolded during the Trump administration in 2018, prompting India to retaliate by levying duties on 28 US products and filing a complaint at the WTO. The standoff was eventually resolved in 2023 through a Mutually Agreed Solution (MAS), under which both sides made limited concessions without invoking WTO’s formal dispute settlement process.

Whether a similar détente is possible this time remains uncertain. Unlike 2023, there is now the added complication of higher tariffs, a stalled WTO appellate mechanism, and political pressures in both countries.

As the US stands firm on national security grounds and rejects India’s appeal for a multilateral discussion, the ball is now in India’s court. With its economic interests at stake and precedent in its favour, New Delhi must weigh the benefits of retaliation against the possibility of securing preferential treatment through backdoor diplomacy.