India's Retaliatory Tariff Move, An Issue Set To Be Discussed During Goyal's US Visit

The retaliatory move comes barely days before Commerce and Industry Minister Piyush Goyal’s visit to the US.

However, this could lead to "some delay" in concluding the bilateral trade agreement (BTA), which many hope would be signed before the 90-day tariff pause window, ending in July. 

The issue of sectoral tariffs imposed by the US has not gained prominence under the BTA ambit. Sources said that the issue may be raised in the forthcoming trade talks.

Following the announcement by the Donald Trump administration to impose a 25 per cent tariff on steel and aluminium goods in March, India sought consultations on the issue with the US, but Washington has not paid heed to India’s requests.

“Despite India’s decision to reduce duties on several items, the US’s unilateral decisions on tariffs cannot be accepted. It is a good move from India's perspective,” Pankaj Chadha, partner and CEO, Jyoti Steel Industries and chairman, Engineering Export Promotion Council (EEPC), told The Secretariat.

The current trade talks primarily focus on ironing out issues related to overall reciprocal tariffs. “Going by the current momentum, we are hoping to have a deal by October — which we had also said earlier,” a government official said.

Most exporters, especially those who can be categorised as micro, small, and medium enterprises (MSMEs), are hoping that the US will extend the pause in reciprocal tariffs after the 90-day deadline, and that the BTA will ease the tariff pressures.

“While the two countries are currently negotiating the trade deal, the issue of sectoral tariffs has not found much mention. The US tariffs are badly hurting our exports, and if they continue, could deal a severe blow to the industry,” Chadha said.

A few days ago, US Commerce Secretary Howard Lutnick had said that the India-US trade deal could take time, and that a host of “tariff lines” would have to be negotiated.

Meanwhile, the US decided to slash tariffs on Chinese imports from 145 per cent to 30 per cent, while Beijing reduced its tariff rates on American imports from 125 per cent to 10 per cent. The new tariffs will be in place for 90 days.

India’s Trade Deals

On May 6, India and the UK signed a free trade agreement (FTA) after negotiations spanning three years. Britain’s Prime Minister Keir Starmer called the trade pact, the biggest after its exit from Brexit, “a fantastic deal”. India is now aggressively trying to conclude bilateral trade deals with the EU, Peru, and Oman, besides the US.

Several countries are also keen to ink trade pacts with India, with its growing middle class and rising disposable income levels.  

Amid uncertainties, the government is now keen to conclude these on a time-bound basis, though in several instances, talks have been carrying on for long. In 2013, India-EU halted their FTA negotiations due to differences in the scope and expectations from the deal. 

Until 2012, almost all of India’s FTA signatories were geographically located to its east, namely, the Association of Southeast Asian Nations (ASEAN), Singapore, Japan, South Korea, and Sri Lanka, noted Carnegie Endowment for International Peace.