US unlikely to grant India tariff relief on steel, autos in mini-deal

Prime Minister Narendra Modi and US President Donald Trump

The United States, so far, is reluctant to exempt India from tariffs on steel, aluminium and certain automobiles at least in the mini-trade deal, which the two sides are negotiating, a person in the know of the developments said.

The more comprehensive first tranche of the Bilateral Trade Agreement (BTA), expected to be agreed upon by autumn, could look into these sectoral tariffs, the source said.

“Sectoral tariffs will not be addressed in the mini-deal; steel and aluminium may continue to face 50 percent,” the person said.

US President Donald Trump raised tariff on steel and aluminium imports from 25 percent to 50 percent on June 4. There is also a 25 percent duty on certain automobiles and auto parts.

India and the US are discussing a scaled-down version of the first tranche of the BTA. An Indian team, led by commerce ministry special secretary Rajesh Agarwal, is in Washington, looking to seal a deal before July 9, when Trump tariffs kick in after the 90-day pause.

The Indian team, which extended its stay beyond June 30, is looking to secure exemptions from the 26 percent reciprocal tariffs and steel, aluminium and automobile levies.

On June 30, White House press secretary Karoline Leavitt said India and the US were close to finalising a trade deal, which would be announced very soon.

"I just spoke to our secretary of commerce about it. He was in the Oval Office with the President. They are finalising these agreements, and you will hear from the President and his trade team very soon when it comes to India," Leavitt said.

India has toughened its stance on the US’s demand for greater access for its agriculture, dairy goods as well as genetically modified (GM) crops.

Metal test

For New Delhi, securing exemption from steeper levies on imports of these metals is vital since India exported $4.56 billion worth of iron, steel, and aluminium products to the US in FY25.

In May, India moved the WTO proposing retaliatory action against the 25 percent import duties on steel and aluminium imposed by the Trump regime on March 12.

India said it may impose tariffs on American goods leading to equivalent duty collection of $1.91 billion in 30 days’ time.

The US rejected India’s notice at the WTO stating that the tariffs were imposed on national security grounds.

In June, the US turned down India's request for WTO consultations on 25 percent tariff on auto parts.