India must prepare to take action against the United States if former President Donald Trump follows through on his threat to impose higher import tariffs, a senior industry executive has warned, reports Bloomberg.
Pankaj Chadha, chairman of the Engineering Exports Promotion Council, stated that if the US imposes a 25 per cent tariff on steel and aluminium imports starting March 12, Indian exporters will face significant setbacks. “We have not started it, but we are not going to sit back and take the punches. India will have to take reciprocal measures to deal with it,” Chadha said.
Impact on Indian exports
In the 2023-24 fiscal year, India exported approximately $18 billion worth of engineering goods to the US, with steel and aluminium accounting for $6.6 billion. The proposed tariffs could severely impact these exports. Industry leaders warn that a trade war is a zero-sum game that will ultimately hurt consumers the most.
India’s Commerce Minister Piyush Goyal is currently in the US negotiating with officials to mitigate the potential fallout. In a bid to ease tensions, India has already made tariff reductions on several US exports, including high-end motorcycles and whiskey. Further tariff cuts on cars, agricultural products, and medical devices are also being considered.
Risk of market disruptions
India and Vietnam, both major steel producers, could suffer from the ripple effects of the US tariff move, with an oversupply of steel potentially hurting local manufacturers. Industry experts also fear China may flood India with cheaper goods if the US tightens tariffs on Chinese products, intensifying competition for Indian exporters.
To safeguard India’s textile sector, businesses are advocating for “zero-for-zero” tariffs with the US. Sudhir Sekhri, chairman of the Apparel Export Promotion Council, emphasised that negotiating lower tariffs on apparel exports could offer a viable solution ahead of the April 2 deadline.
With the US being India’s largest trading partner, accounting for $119.7 billion in trade in 2023-24, industry leaders urge the government to secure a fair deal to protect Indian businesses from the looming tariff escalation.