Background of the Dispute
- The U.S. imposed 25% import duties on steel and aluminium:
- First announced by President Trump in 2018.
- Reimposed in February 2025, removing earlier country-specific exemptions.
- The U.S. claims the measures are for national security, not “safeguards”.
- India disagrees, calling them safeguard measures under WTO rules.
Relevance: GS 2(International Relations)
India’s Response
- On May 9, 2025, India notified the WTO of its plan to impose retaliatory tariffs on $7.6 billion worth of U.S. imports.
- Citing:
- Violation of GATT 1994 and Agreement on Safeguards (AoS).
- Absence of mandatory consultations under Article 12.3 of AoS.
Legal and Trade Implications
- India invoked its WTO rights:
- To suspend concessions or other obligations toward the U.S.
- To impose equivalent tariffs to offset $1.91 billion of duty impact.
- India will notify both:
- The Council for Trade in Goods, and
- The Committee on Safeguards, of its next steps.
Timeline
- Retaliatory tariffs may begin 30 days after May 9, i.e., from June 8, 2025.
- India will apply them to selected U.S. products, details to be announced.
Not a First-Time Move
- In June 2019, India imposed tariffs on 28 U.S. products in retaliation for:
- U.S. removing India from the GSP.
- Continued U.S. steel and aluminium duties.
- These duties (worth $240 million) were withdrawn in September 2023 after diplomatic engagement during PM Modi’s U.S. visit.
Current Trade Tensions Despite Talks
- This retaliation comes even as India–U.S. trade deal talks are ongoing.
- U.S. refused India’s April 2025 request for dialogue, citing national security grounds.
WTO Relevance
- India emphasized that U.S. measures were not notified to the WTO.
- India aims to uphold multilateral trade norms through WTO dispute mechanisms.
