Though India exports only a small fraction of all the steel products that the US imports, Washington’s decision to impose 25% tariffs on all such exports may come as a double whammy for steel producers here.
Indian firms exported 1.22 lakh metric tons of steel products to the US in 2023-24. However, China which exports 2.25 million metric tons, and Vietnam with exports of 3.30 million metric tons to the US, may dump their products in India offering competitive prices.
Trump administration has also announced to impose 10% tariffs on all goods coming to the country with no exemption or exception.
Trump-Modi Talks: Tariffs
Donald Trump believes India has become a “tariff king”, it has adopted protectionist policies, refuses to open the market for US firms, and abuses the “largesse” given. He also thinks that New Delhi must allow a level playing field, failing which it must be punished.
Also Read: US Tariff Shock: How India’s Steel Industry Faces Double Whammy From Trump’s 25% Levy
This may prove to be the most difficult issue to resolve as India enjoys a trade surplus with the US. In the bilateral trade reaching $200 billion, there was a trade surplus of $45 billion favouring New Delhi in FY 2024-25.
India Slashes Tariffs On US-Made Harley Davidson
In an attempt to send positive signs, New Delhi slashed tariffs on US-made Harley Davidson motorcycles.
It cut the tariff on motorcycles, with engines above 1,600cc from 50% to 30%, and from 50% to 40% on those with smaller engines.
Finance Minister Nirmala Sitharaman also reduced the tariffs on synthetic flavouring essences from 100% to 20% and from 15% to 5% on fish hydrolysate for aquatic feed.
She also scrapped tariffs on select waste and scrap items, a big relief to the US since the country exported scrap materials worth $2.5 billion last year.
Does India Use Protectionism?
Analysts point out that more than 75% of the US exports to India are levied between 15% and 5%.
Washington should understad that Indian products are cheaper due to other factors like manpower, power, less customs and other things.
Also Read: Will US Expel Lakhs of Indians? Modi-Trump Meeting This Month Holds Answer!
Political observers believe, the accusation of India not prividing a level-playig field is baseless, as in India the US firms fail to compete with Chinese companies because of state support and other reasons. Also, India generally does not use non-tariff barries on the US goods.
Will India-US Relations Become Transactional?
However, analysts believe, the US approach has changed considerably under Donald Trump, who wants a transactional relationship, rather than a value-based one.
It is also believed that the US President may give any concession to India only on a “give and take” basis, New Delhi must give some concession in one field to get some other in some other field.
Also Read: Modi-Trump Talks: Will India Demand US Not To Handcuff Or Shackle Migrants Before Deportation?
The concession on Harley Davidson bikes may be just the beginning, Washington may demand more. Experts also apprehend that the more concessions you give to the US, the more it may demand and it will not come to an end.
It is a slippery and difficult track, on which PM Mody will have to walk cautiously.
