US President Donald Trump’s plan to reintroduce a 25 pc tariff on steel and aluminium imports has raised concerns among Indian steel producers.
While this move is expected to increase competition and add pressure to an already struggling global steel market, India’s strong domestic demand may cushion the impact.
Indian steel manufacturers have already been dealing with falling prices and lower earnings due to high imports in recent years.
Global rating agency Moody’s has warned that the new US tariffs could lead to further oversupply and create challenges for Indian steel exporters.
The increased competition could force Indian producers to look for alternative markets, as the US becomes a less viable option.
According to the Global Trade Research Initiative (GTRI), US steel and aluminium imports have continued to rise despite earlier trade tensions.
In 2024, primary steel imports reached $33 billion, with Canada, Brazil, and Mexico as the largest suppliers. India’s steel exports to the US, however, have remained much lower, at approximately $450 million.
This suggests that while the tariffs may impact trade dynamics, the effect on India may not be as severe as on other exporting nations.
Ajay Srivastava, founder of GTRI, pointed out that Trump’s tariff policy follows a pattern seen in 2018, when similar import duties were imposed.
At that time, the tariffs were used as a negotiation tool in trade disputes. If the new tariffs are implemented, there could be retaliatory measures from affected countries, leading to further economic uncertainties.
For the US, the move is expected to benefit domestic steel producers by reducing competition from foreign imports. This could allow American companies to raise their prices and gain a stronger foothold in the local market.
Trump has indicated that additional tariffs, known as "reciprocal tariffs," might also be introduced against countries that impose duties on American goods.
Indian steel industry officials believe that the overall impact on India will be limited. Steel secretary Sandeep Poundrik noted that India's steel exports to the US form only a small portion of its total production.
In 2023, India produced 145 million tonnes of steel, out of which only 95,000 tonnes were exported to the US. Given the strong domestic demand and ongoing infrastructure projects, India’s steel industry is expected to remain stable despite the trade restrictions.
This situation bears similarities to 2018, when Trump’s first term saw the introduction of 25 pc tariffs on steel and 10 pc on certain aluminium products. In response, India imposed additional customs duties on 28 US goods.
After years of trade disputes, the US eventually lifted tariffs on Indian steel and aluminium in 2023, following trade negotiations during Prime Minister Narendra Modi’s visit to Washington.
With Trump signalling a return to his aggressive trade policies, analysts warn of renewed uncertainty in global trade. While the US steel industry may benefit in the short term, the potential for trade conflicts remains high.
If other nations respond with their own tariffs, it could disrupt global supply chains and create long-term challenges for the steel industry worldwide.
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