Trump’s 25% Steel Tariff Sparks Fears of Dumping in India

India's steel industry is preparing for possible disruptions following a new threat from US President Donald Trump to impose a 25% tariff on steel and aluminum. Domestic steel manufacturers believe this plan could have significant repercussions on the global steel market, potentially increasing the threat of steel dumping in the country.

Exporters believe there may be an exception for India, as both countries previously reached a trade resolution. This agreement followed India's imposition of tariffs on 28 US items in retaliation for tariffs implemented by Trump in 2019. The resolution was announced during Prime Minister Narendra Modi's visit to Washington then.

Today, India applies a basic customs duty of 7-8% on different grades of imported steel, considerably lower than the newly imposed 25% tariff in the United States. The Indian Steel Association (ISA) has urged the government to take diplomatic action to obtain exemptions from these restrictive measures and to seek relief from long-standing anti-dumping and countervailing duties.

Everyone is now focused on Modi's highly anticipated visit to the US on February 12-13, 2025.

Economic and Employment Implications

As soon as the tariff news made headlines, Indian metal stocks experienced a sharp decline. The Nifty Metal index dropped by 3%, while shares of key industry players such as Tata Steel and JSW Steel saw a 4% decrease, reflecting investor concerns over potential market disruptions.

The steel sector is a major contributor to India's economy, employing millions of workers across manufacturing, mining, and logistics. Any disruption in this industry could have far-reaching consequences, including job losses and decreased investments. A drop in prices due to increased imports will lead to smaller steel producers finding it challenging to remain competitive. A slowdown in domestic production could also negatively affect related industries, such as construction, infrastructure, and automotive manufacturing.
Furthermore, a decline in steel prices could create financial strain for Indian steel companies, many of which have already been grappling with debt challenges in recent years.

India is a minor exporter

Official data showed that India's exports of primary steel to the US reached $450 million in 2024. In contrast, the US imported only $2.83 million worth of steel pipes, tubes, and related products from India last year. Additionally, exports of aluminum and related products from India to the US in 2024 totalled $820 million.

Canada & Brazil directly hit

Reports from Reuters read that the largest sources of US steel imports are Canada, Brazil, and Mexico, followed by South Korea and Vietnam, according to government data and the American Iron and Steel Institute. Canada, which has abundant hydropower resources, is by far the largest supplier of primary aluminum metal to the US, accounting for 79% of total imports in the first 11 months of 2024.

The think tank Global Trade Research Initiative (GTRI) warned that if new tariffs are implemented, major steel exporters to the US, including China, South Korea, Japan, and the European Union, could respond with countermeasures. The European Union had previously imposed retaliatory tariffs on US products, including motorcycles and bourbon whiskey, following the tariffs introduced in 2018.