Trump's Steel Tariff Could Have Cascading Effects On India

The feared impact is that larger players like Canada, Mexico, South Korea and Brazil, thwarted by higher tariffs and non-tariff barriers in the US market, may dump their products in India and elsewhere, playing spoilsport for the likes of Tata Steel, JSW, SAIL, etc.

According to American Iron & Steel Institute data, steel imports accounted for about 23 per cent of American steel consumption in 2023. Canada, Brazil and Mexico were the largest suppliers, followed by South Korea and Vietnam. Canada is also the largest supplier of primary aluminum metal to the US, accounting for 79 per cent of total imports in the first 11 months of 2024.

What It Means For India?

According to Commerce Ministry data, India’s annual exports of iron, steel and aluminum to the US are estimated to be worth around US$ 475 million and US$ 945 million, respectively, for 2023-24. India also sold about US$ 2.79 billion worth of articles made of iron and steel (read fabricated machinery and spares). However, domestic steel players point out that the indirect impact could be potentially more significant. 

The domestic steel industry is not only worried that it would lead to more dumping of steel in India, but also that other countries would raise tariff walls restricting Indian exports. Indian companies sell about US$ 11.86 billion worth of iron and steel to the world and US$ 7.65 billion worth of aluminum.

Their fears may not be completely unfounded. A similar move to impose tariffs on steel and aluminum during Trump’s previous tenure led to a barrage of retaliatory protectionist duties around the world, harming Indian exports. 

Fearing a diversion of Chinese steel exports from the US to the EU, the latter also restricted imports, hitting Indian exports to the EU. The measures also resulted in an increase in Chinese steel exports to India.

India’s steel imports have already jumped to 5.51 million tonne (mt) in April-September 2024-25, compared to 3.66 mt in the same period last year, official data showed. Out of this, imports from China rose to 1.85 mt during that period, from 1.02 mt in April-September 2023-24.

Call for Protection 

The Indian Steel Association (ISA), an industry group of leading domestic steelmakers, expressed deep concern over the US decision to impose tariffs on steel imports. “This latest tariff is expected to slash steel exports to the US by 85 per cent, creating a massive surplus that will likely flood India — one of the few major markets without trade restrictions presently,” said ISA president Naveen Jindal in a statement. 

The US, a major steel importer, has historically imposed strict trade restrictions, with over 30 remedial actions in force, against Indian steel — some for over three decades. India’s carbon steel exports to the US are already negligible, due to longstanding ADD (anti dumping duty) and CVD (counter-vailing duty) measures. Yet, this decision will only add to the misery, and aggravate the situation further, the ISA added. 

“With the US shutting its doors to global steel, the surplus will inevitably be redirected to India, threatening our domestic industry with market distortions, price crashes and unfair competition,” Jindal said. 

Last December, the steel ministry proposed a 25 per cent safeguard duty on certain steel products imported into the country. “If other countries protect their industries through tariffs, we should also focus on measures that safeguard our domestic industry,” a Ministry official said.    

India, the world's second biggest primary aluminum producer, exported 0.2 million tonnes of aluminum to the US, worth Rs 78.3 billion (US$ 894.4 million), in the year ending in March 2024. The latest measures could bring down aluminum exports, and top domestic producers like Hindalco and Vedanta would probably have to turn towards markets in Europe, an industry source pointed out.  

As part of the latest measures, Trump will also impose a new North American standard, requiring steel imports to be ‘melted and poured’, and aluminum to be ‘smelted and cast’ within the region, to curb US imports of minimally processed Chinese and Russian metals that bypass other tariffs. 

The action also extends the tariffs to downstream products that use foreign-made steel, including fabricated structural steel, aluminum extrusions and steel strand for pre-stressed concrete.

To beat that, Indian manufacturers would need to set up or rent re-rolling mills and casting foundries in the US. MAGA (Make America Great Again) could well turn out to be the world’s IA (Invest in America) moment.

(The writer is a veteran journalist. Views are personal)