India's retaliation on US steel, aluminium may cast a shadow on trade deal talks: GTRI

India and the US are set to resume talks on the proposed bilateral trade agreement later this month, with an Indian delegation expected to visit Washington.

India's move to impose retaliatory duties under the World Trade Organisation (WTO) norms over American tariffs on steel and aluminium may cast a shadow on bilateral trade agreement talks which are set to resume later this month.

According to Global Trade Research Initiative (GTRI) think-tank, while India's retaliation may impact trade talks with the US, New Delhi's calibrated, rules-based approach contrasts with the unilateralism of American actions.

"The move also signals a tougher Indian stance, especially in politically sensitive sectors like steel and aluminium that align with its “Make in India” industrial strategy," GTRI said in a note on May 13.

India and the US are set to resume talks on the proposed bilateral trade agreement later this month, with an Indian delegation expected to visit Washington.

This positions India as a staunch defender of multilateral trade norms, the notes said. India’s future countermeasures could include raising tariffs on a list of US imports in a manner that is “substantially equivalent” to the damage inflicted on Indian exports.

According to the notification, US safeguard duties impact approximately $7.6 billion worth of Indian exports, resulting in an estimated $1.91 billion in additional duties collected by the US. India intends to recover this amount through retaliatory duties on selected American goods.

India’s retaliatory tariffs may come into effect 30 days from the date of notification, which is June 8, 2025 unless consultations are initiated or the US withdraws these measures.

"India has also reserved the right to adjust product coverage and tariff rates to ensure a proportional economic response, signaling its determination to use WTO mechanisms robustly," GTRI added.

This is not India’s first brush with safeguard retaliation. In June 2019, New Delhi imposed higher tariffs on 28 US products, ranging from almonds and apples to chemicals in response to certain American trade policies.

According to GTRI, much now depends on Washington’s response.

"If the US engages in consultations or withdraws the contested measures, a resolution may be reached. Otherwise, India’s tariff response could take effect in early June, potentially affecting American exporters and deepening trade frictions", GTRI said, adding that either way, New Delhi's move reflects a broader shift: a willingness to assert itself within global trade rules to protect its economic interests.

The WTO communication, dated May 9,  was circulated at India's request on May 12 midnight.