Trump Doubles Steel Tariffs to 50% - Implications for Global Trade and India’s Exports

The US has doubled steel tariffs to 50%, escalating trade tensions and potentially disrupting global trade. This move may impact India's steel exports, increasing costs and reducing competitiveness. The tariff hike could also spark retaliatory measures, affecting bilateral trade relations and the global economy.

Why in News?

US President Donald Trump announced a sharp hike in steel import tariffs from 25% to 50% to further secure and rejuvenate the US steel and aluminium industries. The new tariff is to be enforced from June 4th.

Key Highlights of the Announcement

Legal basis:

1. The US Trade Expansion Act, 1962, allows the President to impose tariffs if imports threaten national security.
2. Trump previously invoked this in 2018, imposing: 25% tariffs on steel and 10% on aluminium.

Purpose:

• Announced at a steel plant rally (West Mifflin, Pennsylvania), Trump justified the move to “Make America Great Again”, boosting domestic industries.

How does Indian Exporters React ?

Engineering Export Promotion Council (EEPC):

1. The earlier increases already impacted around $5 billion worth of exports to the US in the iron and steel segment.
2. Fears that it will complicate Bilateral Trade Agreement (BTA) negotiations.
3. Requested tariff rate quota (TRQ) exemptions, like those granted to the UK.

Federation of Indian Exporters’ Organisation (FIEO):

1. Highlighted negative impact on semi-finished and finished products.
2. Risk to India’s growing engineering exports, especially: stainless steel pipes, structural steel components, automotive steel parts.

Economical Impact:

Global price ripple effect:

1. The economic impact of these higher tariffs will be significant.
2. US steel prices are already high, at around $984 per metric tonne — far above European prices at $690 and Chinese prices at $392.
3. Projected rise: To $1,180/tonne due to the tariff hike, potentially burdening domestic sectors like: automobile, construction, manufacturing.

Indian export vulnerability: India’s exports to the US (FY 2025) amounts to total $4.56 billion worth of iron, steel, and aluminium products to the US, including -

1. Iron and steel: $587.5 million
2. Articles of iron/steel: $3.1 billion
3. Aluminium and related products: $860 million

Strategic and Diplomatic Problems:

1. India filed a formal notice at the World Trade Organization (WTO).
2. Signals intention to retaliate with tariffs on US goods.
3. Response may include increased tariffs on select US exports within a month.

Conclusion

1. Trump’s decision to double tariffs on steel imports marks a significant shift towards trade protectionism, with far-reaching consequences for global trade dynamics and India’s export strategy.
2. As negotiations on trade agreements continue, India must navigate the dual challenge of protecting its exporters while preserving its strategic bilateral ties with the United States.

Source: The Hindu