Increase in U.S. Tariffs to Potentially Affect India's $4.56 Billion Export of Metals: GTRI Prediction
US President Donald Trump's decision to double tariffs on steel and aluminum imports will significantly impact India's metal exports, according to a report by the Global Trade Research Initiative (GTRI). The revised tariffs, set to take effect on June 4, 2025, are expected to make Indian metal products considerably more expensive in the US market, denting their competitiveness and hurting Indian exporters.
In the fiscal year 2025, India exported $4.56 billion worth of iron, steel, and aluminum products to the US. This includes $587.5 million in iron and steel, $3.1 billion in articles made of iron or steel, and $860 million in aluminum and related products. The new tariffs will likely lead to a decline in export volumes due to reduced competitiveness.
Additionally, the steep tariff hike will price Indian metal products out of the US market compared to domestic US producers and possibly other exporters with lower tariff burdens or preferential trade agreements. Export talks with the US have already become "much more difficult and complicated" as a result of the tariff increase, compounding existing tensions and possibly slowing progress on other bilateral trade discussions.
The cost pressure on US buyers may lead to a shift towards more domestically produced metals or those from countries with lower tariffs, driving up prices for US industries reliant on these materials, such as automobiles, construction, and manufacturing. The export revenue loss could result in job losses and reduced investment in the metals sector if alternative markets are not quickly found.
The tariff hike also raises concern from an environmental standpoint. Steel and aluminum are among the most carbon-intensive materials to produce. While several major economies are pushing investments in green production technologies, the US tariffs do not include any climate-related conditions, signaling a shift toward economic nationalism at the cost of environmental responsibility.
The Indian government has notified the World Trade Organisation and is expected to explore additional countermeasures in response to the tariff decision. This tariff hike is expected to strain India's metals sector and potentially disrupt global steel and aluminum supply chains, while also complicating India's trade relationship with the US.
- The finance industry is likely to witness a decline in investment in India's metal exports due to the increased tariffs, as a result of reduced competitiveness in the US market.
- The DEFIs (Decentralized Financing) platforms may see an influx of funds from Indian metal exporters seeking alternative avenues for investment, given that the new tariffs could lead to revenue loss and potential job losses in the metals sector.
- The political landscape, particularly in relation to US-India trade relations, is likely to be influenced by the tariff hike, as frustration and tensions mount, potentially hindering progress in other bilateral trade discussions.
- General news coverage may focus on the impact of these tariffs not only on the metals industry but also on the broader environmental implications, given the carbon-intensive nature of steel and aluminum production, and the lack of climate-related conditions in the US tariffs.
