Trade Tensions Escalate: India's Response to US Tariffs on Steel and Aluminum

 In 2018, the United States imposed tariffs on steel and aluminum imports, citing national security concerns under Section 232 of the Trade Expansion Act. This action significantly impacted several countries, including India, which argued that these tariffs were protectionist measures disguised as national security concerns.

India's Response: Retaliatory Duties

In response to the US tariffs, India proposed retaliatory duties on a range of US products. This proposal was presented to the World Trade Organization (WTO) as a countermeasure against the trade imbalance caused by the US tariffs on steel and aluminum. The proposed tariffs targeted various sectors, including agricultural goods, steel products, and chemical items. The aim was to offset the financial impact of the US tariffs on Indian exports.

Key US Tariffs:

• Steel: 25%
  
• Aluminium: 10%
  

India's Retaliatory Measures (Proposed):

The proposed tariffs were designed to affect approximately the same value of trade lost due to the US tariffs. The specific products targeted were chosen to create leverage and encourage the US to reconsider its trade policies. The tariffs included a wide array of products to avoid over-reliance on any single sector.

Some affected sectors:

• Agricultural Goods
  
• Steel Products
  
• Chemical Items
  

Impact on International Trade Relations

The imposition of tariffs and retaliatory measures has strained international trade relations. It has raised concerns about the potential for a trade war and the erosion of the multilateral trading system. Countries are increasingly resorting to unilateral measures, undermining the principles of free and fair trade that the WTO promotes. The dispute between the US and India highlights the challenges in balancing national interests with global trade obligations.

Role of the WTO

The WTO plays a crucial role in resolving trade disputes between member countries. It provides a forum for negotiations and a dispute settlement mechanism to address grievances. In the case of the US-India trade dispute, the WTO is responsible for assessing the legality of the US tariffs and the appropriateness of India's retaliatory measures. The WTO's rulings can influence the behavior of member countries and promote compliance with international trade rules. However, the effectiveness of the WTO is being tested by the increasing use of unilateral measures and the blocking of appointments to the WTO's appellate body.

Summary

The trade dispute between the US and India over steel and aluminum tariffs underscores the challenges facing the multilateral trading system. India's proposal for retaliatory duties highlights the potential for escalating trade tensions and the need for a rules-based approach to resolving trade disputes. The WTO's role in this dispute is critical, but its effectiveness depends on the willingness of member countries to abide by its rules and rulings. The future of international trade relations hinges on finding a balance between national interests and global trade obligations.