NEW DELHI: Indian steel producers will be facing a new set of challenges for exporting products after US President Donald Trump announced plans to reintroduce a 25 per cent tariff on all steel and aluminium imports, a decision which was met with much criticism by EU, China and other major trading partners.
Trump steel tariff to be a significant blow for Indian steel makers?
Global rating agency Moody’s warned of major setbacks for Indian steel manufacturers who are already undergoing much pressure, struggling with low prices and falling earnings due to high steel imports into the country in the past 12 years.
Hui Ting Sim, assistant vice president at Moody’s Ratings, said, “The US tariffs on steel will increase competition and exacerbate oversupply at other steel producing markets. Indian steel producers will face increased challenges in exporting their products.”
Data from the think tank Global Trade Research Initiative (GTRI) shows that despite the trade war that began in 2018, US imports of steel and aluminium have continued to rise. In 2024, primary steel imports reached $33 billion, up from $31.1 billion in 2018.
The largest suppliers in the corresponding year were Canada ($7.7 billion), Brazil ($5 billion), and Mexico ($3.3 billion). Meanwhile, imports from China and India remained significantly lower, at $550 million and $450 million, respectively.
Ajay Srivastava, founder of GTRI, noted that Trump’s latest tariff plan follows a familiar pattern. “If Trump follows the same playbook, the return of tariffs on steel and aluminium could be used as leverage in trade negotiations. The 2018 tariffs were widely seen as an aggressive strategy to force trading partners into concessions. The latest move, if implemented, could lead to new trade disputes and retaliatory measures from affected countries,” he told PTI.
However, the move is said to benefit domestic steel producers in the US, who would now have access to a market with strong demand for steel, allowing them to raise selling prices.
Trump indicated he would announce the new tariffs on Monday, with further details on potential “reciprocal tariffs” expected on Tuesday or Wednesday. This means the US could impose additional duties on imports from countries that have placed tariffs on American goods.
For countries like India, the impact could be significant, especially as steel exporters try to find alternative markets in an already oversupplied global industry.
Indian domestic market strong enough to withstand the blow?
Reflecting on the amount of steel India exports to the US, the tariffs should not have much impact on the Indian industry, as the domestic market is strong, steel secretary Sandeep Poundrik said on Monday.
He said, “The US President has said about putting tariffs on steel. How much steel actually we export to the US? We produced 145 million tonnes of steel last year, of which 95,000 tonnes was exported to the US. So, how does it matter if out of 145 million tonnes, you are not able to export 95,000 tonnes.”
In his address at an event organised by Bengal Chamber of Commerce and Industry (BCC&I) he remarked that the domestic market itself is strong enough because of the growing consumption, which in upcoming years, the steel industry will find difficult to cater to.
Trade tension of 2018
The situation is similar to what happened in 2018 when Trump, during 1st tenure, introduced similar import duties 25 per cent on steel and 10 per cent on certain aluminium products. A year later, India retaliated by imposing additional customs duties on 28 US products.
On July 3, 2023, after years of tariff tensions, the US removed tariffs on steel and aluminium imports from India. The decision came as part of a broader trade resolution announced during PM Narendra Modi’s visit to Washington, which saw India agreeing to open its market further to American goods.
Now, as Trump signals a return to his aggressive trade policies, analysts warn of fresh uncertainty in global trade. “If history repeats itself, the US steel and aluminium industries may benefit in the short term, but global trade frictions could intensify, with lasting economic consequences,” Srivastava cautioned.
