India is once again gearing up for retaliatory trade action against the United States, in response to a brewing dispute at the World Trade Organisation (WTO). This time, the friction revolves around the US imposing steep import duties on Indian steel and aluminium, a move India believes violates WTO norms.

What Sparked the Dispute?

On May 9, 2025, India formally notified the WTO of its intent to suspend trade concessions previously extended to the US. This decision was made in reaction to Washington's 25% import tariff on steel and aluminium, first introduced back in March 2025.

India's notice followed WTO procedural rules, stating that retaliatory measures can be enacted 30 days after notification, i.e., from June 8, 2025.

However, the situation escalated when, on May 22, the United States officially rejected India’s WTO claim. According to Washington, the tariffs were not "safeguard measures" under WTO rules. Instead, the US argued that the tariffs were imposed under national security grounds, citing Section 232 of its Trade Expansion Act.

As a result, the US refused to engage in WTO safeguard consultations, arguing India has no legal grounds to revoke trade benefits or apply retaliatory tariffs.

India’s Possible Retaliation Measures

With no resolution in sight, India is now exploring countermeasures, which could include:

• Suspending trade concessions for the US

• Imposing higher tariffs on key American imports, such as:

  • Almonds

  • Walnuts

  • Metals and related products

Sources cited by Hindustan Times said the Indian government may target high-value US agricultural and industrial exports, unless Washington offers concessions under an early harvest trade agreement that is currently being negotiated.

A US trade delegation is also expected to visit New Delhi this week to advance bilateral discussions.

Why This Dispute Matters

This isn’t the first time India and the US have clashed over metal tariffs. A similar dispute occurred in 2018, when the US imposed tariffs during the Trump administration. Back then, India responded with retaliatory tariffs on 28 American products and lodged a formal complaint at the WTO.

That earlier issue was resolved through a Mutually Agreed Solution (MAS) in June 2023, under which:

• The US allowed limited market access for Indian metal products.

• India rolled back some of its retaliatory duties.

However, the current escalation suggests that past resolutions may not prevent future conflicts, particularly with the WTO appellate body defunct since 2020. Without this dispute resolution body, many WTO member countries now see such legal filings as negotiating tools rather than binding procedures.

US Raises the Stakes Further

On May 30, the US added fuel to the fire by announcing an increase in tariffs on steel and aluminium to 50%, effective June 4, 2025. The official justification was again domestic industry protection, citing continued overcapacity and dumping by foreign exporters.

This latest decision by Washington is likely to deepen the trade rift and pressure India into negotiating more favorable bilateral terms for its exports.

India’s Stand: Legal or Political?

India insists that the 25% US tariffs qualify as “safeguard measures”, triggering its rights under Article 8.2 of the WTO Agreement on Safeguards, which allows for compensation or suspension of equivalent concessions. The US, however, maintains the tariffs are national security measures, not trade safeguards.

This legal distinction is at the heart of the disagreement. WTO rules allow members to deviate from commitments under national security exceptions, but such clauses are vaguely defined and controversial.

With the WTO appellate mechanism inactive, there’s no clear way to adjudicate this legal tug-of-war, leaving both sides to use retaliatory measures and bilateral diplomacy as their primary tools.

Implications for Indian Exporters and Importers

If retaliatory tariffs are imposed, it will:

• Impact US agricultural exporters, especially almond and walnut producers.

• Potentially drive up prices of American imports in India.

• Put pressure on Indian businesses that rely on importing certain US metals or products.

Conversely, it could also encourage diversification of import sources and boost domestic metal production in India if American imports become too expensive.

On the export front, India is expected to demand preferential treatment for Indian steel and aluminium products, something that could be negotiated under the early harvest Bilateral Trade Agreement (BTA).

Looking Ahead: A Diplomatic Tug-of-War

The dispute has once again exposed the fragility of the global trade dispute system. With the WTO’s dispute settlement body stalled, such confrontations are increasingly settled through power politics and bilateral trade-offs, not multilateral enforcement.

A senior Indian official described the situation as “vexed”, hinting that this may just be one chapter in a longer saga of Indo-US trade disagreements. Whether the upcoming negotiations lead to a breakthrough remains to be seen, but India is clearly signalling that it won't back down without leverage.

In Summary:
India is pushing back after the US dismissed its WTO claim regarding metal tariffs. With retaliatory tariffs on almonds, walnuts, and metals in the pipeline, and bilateral trade negotiations underway, both countries are entering a critical phase that could reshape their trade dynamics for years to come.

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