Since returning to the US presidency in January, Donald Trump has aggressively pursued a hardline protectionist trade policy, imposing broad tariffs on steel and aluminium imports from allies and rivals alike. This week’s announcement of a 50% tariff on all steel and aluminium imports, effective June 4, marks a sharp escalation that threatens to disrupt global trade and severely impact key exporting countries such as India.

Legal Battles and Tariff Escalation

The new tariffs follow a turbulent legal battle. Earlier, a US federal court ruled that Trump had exceeded his authority with a prior version of the tariffs, posing a significant setback. However, an appellate court quickly reversed this decision, permitting the tariffs to remain while legal challenges continue. Encouraged by the ruling, the Trump administration doubled the tariff rate from 25% to 50%, signaling a more aggressive stance in its trade agenda.

Impact on Indian Exports

India, as one of the world’s largest exporters of steel and aluminium products to the US, faces a serious threat from the tariff hike. In 2024-25, India exported USD 4.56 billion worth of iron, steel, and aluminium products to the US market, including key categories such as:

• USD 587.5 million in iron and steel

• USD 3.1 billion in articles of iron or steel

• USD 860 million in aluminium and related products

The steep 50% tariff will render Indian shipments uncompetitive, directly impacting the profitability of Indian producers and exporters. Industry leaders including JSW Steel, Tata Steel, Hindalco, and NALCO have significant exposure to the US market, either through exports or subsidiaries.

Economic Consequences

The tariff increase will likely lead to a substantial drop in export volumes, especially for price-sensitive products such as auto parts, construction materials, industrial goods, and packaging. Indian exporters could face annual revenue losses between $1.5 billion and $2 billion, contingent on the tariff duration and the response of US buyers.

Moreover, many Indian suppliers provide intermediate goods to US manufacturers, and disruption to this supply chain could have long-term adverse effects beyond immediate revenue losses. The loss of integrated supply contracts risks undermining India’s position in global manufacturing value chains.

Retaliation and Trade Relations

India has already issued a formal notice at the World Trade Organization (WTO) signaling its intent to impose retaliatory tariffs on US goods following the initial steel tariffs. With the tariffs now doubled, India’s decision to implement countermeasures within the next month remains closely watched. Retaliatory tariffs could escalate tensions further, potentially harming broader bilateral trade relations.

Broader Implications

The tariff hike highlights the fragility of the global trade order amid rising protectionism. The US's preferential trade agreements like USMCA (covering Canada and Mexico) provide exemptions that Indian exporters lack, putting them at a severe disadvantage. This shift may encourage Indian exporters to explore alternative markets and push for stronger diplomatic engagements to resolve trade disputes.

In conclusion, the doubling of US steel and aluminium tariffs to 50% presents a critical challenge for India’s metal exports, threatening billions in revenue and jeopardizing integrated supply chains. As India weighs retaliatory options at the WTO, the unfolding trade tensions underscore the urgent need for strategic responses to safeguard Indian industry interests and maintain robust trade relations with the US.

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