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Trump's new move could hammer India’s factories, and wreck exports and jobs.


Date: 06-06-2025
Subject: Trump's new move could hammer India’s factories, and wreck exports and jobs
At a rally in Pennsylvania last Friday, US President Donald Trump declared, “We’re going to bring it from 25 per cent to 50 per cent, the tariffs on steel into the United States of America. At 25 per cent, they can sort of get over that fence… At 50 per cent, they can no longer get over the fence.”

True to his words, Trump signed a proclamation on Tuesday doubling tariffs on steel and aluminium imports to 50%, a move that could have far-reaching consequences for global trade, including India’s export sector. The decision, which excludes the United Kingdom, took effect on June 4 and is seen as part of Trump’s renewed “America First” trade policy ahead of the upcoming election cycle.

The UK was officially exempted from the tariffs following a meeting in Paris between British Trade Minister Jonathan Reynolds and US Trade Representative Jamieson Greer at the OECD summit.

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Export worry for India
India exported around $4.56 billion worth of steel, aluminium, and related products to the US in FY25, according to data from the Global Trade Research Initiative (GTRI). These included:

$587.5 million in iron and steel products
$3.1 billion in articles of iron or steel (up 14.1 per cent year-on-year)
$860 million in aluminium and related items


Much of this output comes from small and medium-sized manufacturers concentrated in Maharashtra, Gujarat and Tamil Nadu, where job losses may become unavoidable.

Moody’s Ratings, in a note dated February 10, warned that Indian steel producers will face greater difficulty in exporting their products following the tariff hike. "Over the past 12 months, high steel imports into India have already dampened prices and earnings," said Hui Ting Sim, Assistant Vice President at Moody’s.

“Indian producers are already struggling due to low-cost imports, and the doubled tariffs could worsen their situation,” noted the Aluminium Association of India (AAI).

The Engineering Export Promotion Council of India (EEPC) also warned that the 50% tariffs could pose a serious threat to this key export segment. According to Business Today, EEPC Chairman Pankaj Chadha said, “The proposed hike could jeopardise engineering exports worth around $5 billion.”

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He said that India should seek a waiver similar to the UK’s, as part of its ongoing bilateral trade agreement (BTA) talks with the US. “This may not be the right time for such unilateral tariffs, especially when BTA talks are underway. It could complicate negotiations,” he added.


In 2024, the largest steel exporters to the US were Canada ($7.7 billion), Brazil ($5 billion), and Mexico ($3.3 billion). Imports from China and India, on the other hand, stood at $550 million and $450 million, respectively. While India’s share is small, it could become strategically vulnerable.


Consumers to take big hit
While exporters are bracing for revenue losses, everyday consumers could soon feel the impact. Higher input costs for products ranging from cars to refrigerators are expected to be passed on to buyers.


If cheap steel that can't enter America floods the Indian market, it could weaken pricing power for domestic producers and trigger volatility in construction and manufacturing, two key sectors.

“It is important that India implements necessary trade measures proactively and in time. There is likely to be increased risk of trade diversion into India due to changing global tariffs, and India is very vulnerable due to strong domestic demand,” said Jayant Acharya, Joint Managing Director and C ..

Ranjan Dhar, Director and Vice President (Sales & Marketing) at AMNS India, added, “We hope more protection will come for domestic industry. Every country is protecting its industry. India should also do that as long as it focuses on protecting itself from low-priced imports.”

India’s response
Union Minister H D Kumaraswamy played down the broader impact of the move on India. “Minor impact will be there... A minor problem is there because we are not exporting in a big way. The only thing is, if the consignment, which is already on its way (to the US from India), reaches after 4 June, then there is some problem as they have to pay 50 per cent tariffs,” he said.

Despite relatively low export volumes to the US compared with Canada and Mexico, Indian authorities have filed a formal notification at the World Trade Organization (WTO), indicating that retaliatory tariffs may be imposed on US imports if needed. Any such response would aim to match the value of US metal exports into India, currently estimated at around $2 billion.

This mirrors India’s move in 2019, when it imposed additional customs duties on 28 US products in retaliation for Washington ..


Ajay Srivastava of GTRI said, “If Trump follows the same playbook, the return of tariffs on steel and aluminium could be used as leverage in trade negotiations... The latest move, if implemented, could lead to new trade disputes and retaliatory measures from affected countries.”

Trade diversion threat looms
The biggest concern is trade diversion. As countries such as South Korea and Vietnam face similar tariff barriers in the US, they may offload excess metal into India, resul ..

This might seem beneficial to consumers in the short term but could severely harm domestic manufacturing, a major source of employment. If countries redirect their steel to India, it could distort local prices and introduce uncertainty in planning and costing, whether one is building infrastructure, assembling cars or manufacturing appliances.


India has been a net steel importer for two consecutive years. In FY25, imports rose 9.2% to 10.5 million tonnes, while exports dropped 27% to 6.3 million tonnes, reversing India’s traditional trade surplus in steel.

This imbalance has affected domestic producers in several ways:

Underutilised manufacturing capacity
Margin erosion due to depressed global prices
Risks to employment and future investment
In response, the Indian government imposed a 12% provisional safeguard duty on flat steel products effective from 21 April 2025, to curb cheap imports and stabilise the domestic market.

The duty applies to a wide range of flat steel products including hot-rolled c ..

These products had seen a sharp increase in imports from China, Vietnam and South Korea, often at prices well below the cost of production in India.

T V Narendran, CEO of Tata Steel, warned that the financial health of the industry could deteriorate without timely action. “If current trends continue, we will have to revise our investment plans and reassess our capex strategy,” he said.


Global impact and outlook
The tariff hike is viewed as a continuation of Trump’s protectionist approach, rooted in national security concerns and efforts to preserve manufacturing jobs. According to the US government's Producer Price Index, steel prices have already increased by 16% since January 2025.

With imports accounting for roughly one-quarter of US steel consumption, mainly from Canada, Mexico, Japan and South Korea, the effects are expected to ripple through global supply chains.

Additionally, Fitch Ratings noted that Indian steelmakers could face pricing and demand pressures if major exporting countries begin redirecting surplus volumes to India.

Countries will now need to act quickly to protect their manufacturers and consumers while managing trade relations with the US to minimise the impact on their economies.


Source Name : Economic Times

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