GTRI says India should not take any action yet on Donald Trump's metal tariff hike

US President Donald Trump with Prime Minister Narendra Modi

India should adopt a wait-and-watch approach for now towards US President Donald Trump's decision to increase and reinstate tariffs on steel and aluminium imports, said Ajay Srivastava, Founder, Global Trade Research Initiative (GTRI).

"Higher tariffs would make US exports less competitive, benefiting suppliers like China, Japan, South Korea, Vietnam, and Indonesia. If more countries impose similar tariffs, US exports would struggle globally. India need not take any action and wait for more of Trump’s action to unfold," Srivastava added.

US President Donald Trump on February 10 signed executive orders reinstating and expanding tariffs on steel and aluminium imports, heightening trade tensions with key allies and trading partners. The move cancels previous exemptions and duty-free quotas for major suppliers, including Canada, Mexico, and Brazil, increasing the risk of a multi-front trade war.

While, Trump raised the tariff rate on aluminium imports from 10 percent to 25 percent, reversing exemptions granted under his 2018 Section 232 national security tariffs, he also reinstated a 25-percent tariff on millions of tons of steel and aluminium imports that previously entered the US without duties due to quota agreements and product exclusions.

Srivastava explained that If India and other countries impose a 25-percent tariff on steel and aluminum products from the US, it would hurt American manufacturing and exports.

Canada and Mexico, the largest exporters of steel to the U.S., are expected to be among the hardest hit. Brazil and South Korea, also key suppliers, face similar risks.

Official data shows, India imported more than it exported in these categories during the calendar year of 2024.

While India imported $784.09 million in iron and steel in 2024, exports in this category stood at a lower $459.95 million. In aluminum, inbound shipments were worth $831.97 million versus $783.35 million in outbound shipments.

Trump’s tariff policy follows his broader protectionist approach during his 2017-2021 presidency, when he imposed sweeping duties on China, Mexico, and Canada. While he insists foreign exporters will bear the burden of the tariffs, many economists argue that American consumers and businesses will ultimately face higher costs.