Trump Implements 50% Tariff on Steel and Aluminium Imports
India’s engineering exports are poised for significant challenges following US President Donald Trump’s announcement of a 50 percent tariff on foreign steel and aluminum imports. This new tariff, effective June 4, 2025, will double the existing duty and is expected to impact approximately 25 percent of India’s engineering exports to the United States. The Engineering Export Promotion Council of India (EEPC) has expressed concerns that this move could lead to a decline in shipments, as the annual export of steel and aluminum to the US currently stands at around USD 5 billion.
Impact of the Tariff on Indian Exports
The EEPC has highlighted the potential repercussions of the proposed tariff increase, which would apply to steel, aluminum, and their derivatives. Pankaj Chadha, chairman of EEPC India, noted that the previous 25 percent tariff had already created substantial difficulties for Indian exporters. If the US proceeds with the 50 percent tariff, it could make exports of these essential items significantly more expensive, leading to a likely decrease in shipments. Although India’s direct steel exports to the US are relatively modest, the tariff is expected to disrupt global trade patterns, intensifying international competition and affecting pricing structures.
The EEPC has urged the Indian government to seek exemptions similar to those granted to the UK through a bilateral trade agreement. Chadha emphasized that the timing of such a unilateral tariff is questionable, especially amid ongoing negotiations for a bilateral trade agreement (BTA) with the US. He remarked that the proposed tariff increase could complicate the negotiations, which are crucial for maintaining India’s export levels.
Concerns from the Aluminium Industry
The Aluminium Association of India (AAI) has also raised alarms regarding the US decision to double aluminum import tariffs. The AAI warned that the increased tariffs would adversely affect Indian manufacturers who are already facing challenges from low-cost imports. President Trump announced the hike in aluminum tariffs from 25 percent to 50 percent, effective June 4, which the AAI believes will further damage the Indian aluminum industry.
Aluminum is a vital metal for various sectors, including defense, aerospace, telecommunications, energy transition, power, and construction. The AAI has pointed out the rising influx of primary aluminum and low-quality scrap into India, calling for protective measures akin to the recent 12 percent provisional safeguard duty imposed on certain steel imports. The association highlighted that the aluminum industry has invested over Rs. 1.5 lakh crore to develop a domestic production capacity of 4.2 million tonnes per annum (MTPA) and deserves similar safeguards to protect its interests.
Trade Negotiations and Future Outlook
B.K. Bhatia, Director General of the Federation of Indian Mineral Industries (FIMI), noted that the US accounted for $946 million of India’s aluminum exports. He expressed hope that the issue would be resolved during ongoing trade negotiations between India and the US. In the fiscal year 2024-25, India’s exports to the US in this category included $587.5 million in iron and steel, $3.1 billion in articles of iron and steel, and $860 million in aluminum products, totaling approximately $4.56 billion.
The latest tariff hike falls under Section 232 of the US Trade Expansion Act of 1962, which allows the President to impose duties if imports are considered a threat to national security. This is not the first time such tariffs have been implemented; Trump previously imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum in 2018, later increasing aluminum tariffs to 25 percent in February 2025. As the situation develops, stakeholders in India’s engineering and aluminum sectors are closely monitoring the impact of these tariffs on their export capabilities.
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