India has firmly rejected concerns raised by the United States over potential retaliatory action on steel and aluminium tariffs, calling them "baseless". As bilateral discussions and formal engagements continue at the World Trade Organization (WTO), government sources clarified that any Indian response will be calculated based on both legal and strategic factors.

The conversation comes amid growing efforts from both countries to finalise an interim trade deal ahead of a critical July 9 deadline, after which reciprocal tariffs may be reinstated unless a resolution is reached.

US Concerns on Retaliatory Tariffs Deemed Baseless

According to Indian officials, the US fears of a retaliatory trade move by India are misplaced. These concerns surfaced in light of ongoing deliberations over Trump-era additional tariffs, particularly the 26% duty on Indian steel and aluminium exports.

However, sources close to the Indian government assert that no such action has been confirmed yet and any decision will depend on the outcome of ongoing legal clarifications following recent US court rulings, which have created some ambiguities around tariff enforcement.

India's Calculated Approach on Next Steps

Indian officials acknowledged that the US retains powers under various legal provisions such as Sections 301, 128, and 228, which allow it to impose fresh or continued tariffs. Therefore, India will weigh all legal possibilities carefully before deciding whether to move forward with reciprocal tariffs.

The current legal stay on India's proposed retaliatory tariffs lasts until July 9, giving both countries a short window to reach consensus and avoid an escalation of trade tensions.

Trade Relationship Context and Energy Strategy

Despite the differences, India continues to see the US as a key trade and strategic partner. India maintains a trade surplus with the US, and this has become a sensitive issue in trade talks.

To address the trade imbalance, Indian officials have highlighted plans to increase energy imports from the US, including shale gas, crude oil, and LNG, which would not only diversify India’s energy basket but also help narrow the trade deficit.

Focus on Interim Deal and July 9 Deadline

An American trade negotiation team is scheduled to visit New Delhi on June 4, to finalise the terms of an interim trade deal before the July deadline. The objective is to avert the reapplication of reciprocal tariffs, which were earlier put on hold under a mutual understanding.

Sources have confirmed that the proposed deal could cover a wide range of goods and digital services, marking the first step in a broader multi-sector Bilateral Trade Agreement (BTA) expected to be signed by October 2025.

India's Tariff Relief and Export Goals

As part of the broader negotiations, India is seeking exemptions from the 26% additional tariffs imposed under Section 232. Indian officials argue that products from India face fewer non-tariff barriers (NTBs) in the US compared to the European Union, providing a fairer playing field in American markets.

The recent resolution of issues surrounding Indian mango exports further underscores the progress in removing trade irritants between the two countries.

US Demands Market Access in Key Sectors

From the US side, negotiators have been pushing for increased market access in India for:

• Industrial goods

• Automobiles

• Wines and petrochemicals

• Dairy and other agricultural products

These are seen as high-priority sectors for American businesses aiming to penetrate the Indian market.

India’s Strategic Trade Demands

India, meanwhile, is aiming to protect sensitive sectors like agriculture and dairy by pushing for:

• Import quotas or a Minimum Import Price (MIP) on such goods

• Reduction in Basic Customs Duty (BCD) by 5–7% for labour-intensive sectors like leather and footwear

Such measures are intended to boost India’s exports, support job creation, and strengthen domestic manufacturing under the Make in India initiative.

Looking Ahead: $500 Billion Trade Goal

Both nations are working toward an ambitious goal to double bilateral trade to $500 billion by October 2025. This will be facilitated through:

• A multi-sector Bilateral Trade Agreement (BTA)

• Enhanced collaboration on energy and digital trade

• Progressive liberalisation of tariffs and quotas

The first tranche of the BTA is expected to be signed alongside the interim agreement, marking a significant milestone in US-India trade relations.

Conclusion: A Crucial Window for Trade Diplomacy

The current standoff over steel and aluminium tariffs is a test case for the evolving US-India economic relationship. While India has firmly dismissed US concerns as baseless, both sides appear committed to dialogue and are actively working to avoid a tariff escalation.

With a key deadline approaching on July 9, the visit of the American negotiating team on June 4 is expected to be a turning point. If successful, the interim deal could pave the way for a long-term trade pact, positioning India and the US as stronger economic allies in an increasingly competitive global environment.

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