US Rejects India's WTO Tariff Notice, Trade Tensions Ramp Up

• Washington refused to discuss retaliatory tariffs, citing national security under Section 232 of its Trade Expansion Act.
• India may raise duties on US imports like almonds and metals if no resolution is reached by June 8.
• Over $4.5 billion in Indian steel and aluminium exports to the US now face steep tariffs, potentially impacting trade significantly.

The United States rejected India's notification on May 9 to the World Trade Organization (WTO) seeking retaliatory tariffs against the higher US tariffs on steel and aluminium. Citing reasons of national security, Washington contended that the tariffs are not "safeguard measures" and hence, are beyond the ambit of WTO dispute settlement.

India threatened to suspend trade concessions on American goods by June 8 unless the tariffs were lifted. In response, New Delhi plans to raise import duties on American items like almonds, walnuts, and some metals.

Tensions flared further after the US, under the Trump administration, doubled the tariffs to 50% on May 30. The US has formally informed the WTO that it will not engage in consultations with India on the matter, asserting the tariffs fall under Section 232 of the Trade Expansion Act-a clause invoked on grounds of national security.

With no word on this from India's Ministry of Commerce so far, the indications are that India might proceed with its retaliatory actions unless a deal is struck through the current Bilateral Trade Agreement (BTA). A US trade delegation is due to arrive in India this week to negotiate.

Trade analysts warn that the consequences would be serious for Indian exporters. As much as $4.56 billion worth of steel and aluminium exports to America now attract high duties. "The impact could be severe," warned Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).

This conflict is a replica of an earlier confrontation that occurred in 2018, which was finally resolved in 2023 via a compromise. Nonetheless, since the WTO appellate court is presently dysfunctional, trade officials observe that such conflicts now have no enforcement mechanisms for resolution.