India has formally notified the World Trade Organisation (WTO) of its intent to impose retaliatory duties against the United States in response to American tariffs on steel and aluminium imports. This move, while rooted in international trade law, could have significant ramifications on bilateral trade negotiations between the two countries, which are scheduled to resume later this month.

Background to the Trade Dispute

The trade friction originates from the US safeguard duties imposed under Section 232 on global imports of steel (25%) and aluminium (10%), citing national security concerns. These tariffs have affected multiple countries, but India claims they have caused economic harm amounting to approximately $1.91 billion, impacting $7.6 billion worth of Indian exports.

In response, India has notified the WTO Dispute Settlement Body that it intends to impose retaliatory duties on US products equal to the loss incurred. These duties are expected to come into effect by June 8, 2025, unless the US withdraws the measures or initiates consultations within that time frame.

A Calibrated Yet Tough Indian Stance

According to the Global Trade Research Initiative (GTRI), India’s move underscores a calibrated, rules-based approach, in stark contrast to the unilateralism shown by the US. While India has remained largely restrained in its global trade disputes, this step signals a shift toward assertive use of WTO mechanisms to defend its economic interests.

The GTRI states:

“India’s decision reflects a tougher stance, especially in politically sensitive sectors like steel and aluminium, and aligns with the Make in India industrial strategy.”

Impact on Ongoing India-US Trade Talks

This development comes just ahead of India-US bilateral trade talks, which are expected to resume in Washington later this month. The Indian delegation is preparing to push for resolving existing trade irritants, enhancing market access, and creating a roadmap for a more stable long-term partnership.

However, India’s move to retaliate via WTO rules may introduce new complexities into these negotiations. While India views this as an assertion of its rights, the US might see it as an escalation—potentially straining dialogue if not managed diplomatically.

Details of India’s Retaliatory Measures

India has not yet released the exact list of products that will face higher tariffs. However, officials have indicated that the retaliatory tariff structure will be “substantially equivalent” to the damage suffered, as mandated under WTO Dispute Settlement Understanding (DSU).

India has also reserved the right to adjust product coverage and tariff rates dynamically, depending on any changes in US policy or consultations that may follow.

Important Note: The move is not unprecedented. In June 2019, India imposed higher duties on 28 US products, including almonds, walnuts, apples, and chemicals, in response to American trade policies such as the withdrawal of India’s benefits under the Generalised System of Preferences (GSP).

Timeline and WTO Procedures

• WTO Notification Date: May 12, 2025

• Tariffs to Take Effect: June 8, 2025 (30 days post-notification)

• Room for Resolution: If the US initiates consultations or withdraws tariffs, India may hold off on implementing its measures.

The WTO communication was circulated at India’s request and is now part of the official dispute resolution proceedings, indicating a formal escalation of the issue under multilateral trade rules.

India’s Strategic Trade Positioning

Through this move, India is sending a strong message globally. It is positioning itself as a staunch defender of multilateral trade norms, willing to act within WTO frameworks to safeguard national interests. The use of WTO-approved retaliatory tariffs underscores India’s intent to not let trade imbalances go unchallenged.

According to GTRI:
“This marks a broader shift in Indian trade policy—a willingness to assert itself strongly within global trade rules, especially when it comes to protecting vital sectors and maintaining fair treatment for Indian exporters.”

What Could Happen Next?

The situation now hinges on the US response:

• If the US agrees to bilateral consultations or withdraws the contested duties, the matter may be resolved diplomatically.

• If not, India will likely go ahead with its retaliatory tariffs, impacting select US exports and escalating trade tensions.

This could affect US agricultural exports, technology products, and industrial equipment—sectors where India may strategically impose higher duties.

Implications for American Exporters

Should the retaliatory duties kick in:

• American exporters may face losses, particularly in sectors like agriculture, chemicals, and machinery.

• There could be a chilling effect on future bilateral deals, as businesses in both countries reassess risks associated with trade policy uncertainties.

• It may also prompt political lobbying within the US to de-escalate the dispute, especially if major export constituencies are affected.

Why This Move Matters

• It signals that India is no longer content with passive diplomacy in trade conflicts.

• Asserting rights within the WTO strengthens India’s global trade image and gives it a voice in shaping fair practices.

• This could serve as a precedent for future disputes, encouraging other developing economies to follow suit in leveraging WTO rules for corrective action.

Conclusion: A Delicate Balancing Act

India’s decision to impose retaliatory tariffs under WTO provisions marks a critical turning point in its trade diplomacy with the United States. While it remains committed to ongoing dialogue, the move reflects a clear intent to defend its economic interests robustly and legally.

As trade talks resume later this month, the ball is now in Washington’s court. Will the US choose dialogue and de-escalation, or hold firm on its tariffs and risk a deeper trade conflict with one of its fastest-growing partners?

The outcome will not only affect India-US relations, but also set the tone for how global trade disputes are handled in an increasingly protectionist world.

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