India Challenges US Metal Tariffs Through WTO Mechanisms

India has officially proposed implementing retaliatory duties against the United States through the World Trade Organization framework, escalating a long-running dispute over American tariffs on steel and aluminum. According to a WTO communication dated May 9, 2025, India's proposed suspension of concessions would target $7.6 billion worth of US imports, with duties designed to collect approximately $1.91 billion, matching the estimated impact of US tariffs on Indian exports. The Indian government maintains that while the US has characterized its metal tariffs as national security measures, they effectively function as safeguard measures that should comply with WTO rules. This formal notification follows India's April request for consultations with the US under the WTO's safeguard agreement, which failed to resolve the dispute. The proposed retaliatory measures represent a significant escalation in trade tensions between the world's largest and fifth-largest economies at a time when both sides are simultaneously engaged in negotiations for a bilateral trade agreement.

US Tariff Evolution Creates Mounting Friction

The dispute originated on March 8, 2018, when the first Trump administration imposed 25% tariffs on certain steel products and 10% on aluminum articles, citing national security concerns under Section 232 of the Trade Expansion Act. These measures, which took effect on March 23, 2018, were extended in January 2020 despite international criticism. The conflict intensified following a February 10, 2025, revision of these safeguard measures by the current US administration, which maintained the 25% tariffs with an unlimited duration, effective March 12, 2025. India's WTO filing specifically challenges these extended measures, arguing they have not been properly notified to the WTO and contradict both the General Agreement on Trade and Tariff 1994 and the Agreement on Safeguards (AoS). The Indian government contends that the US characterization of these tariffs as national security measures rather than safeguards represents an attempt to circumvent WTO disciplines, which require temporary application and progressive liberalization of safeguard measures, along with compensation for affected trading partners.

Legal Basis for Retaliation Hinges on Measure Classification

India's legal strategy centers on establishing that the US metal tariffs constitute safeguard measures despite American assertions to the contrary. The WTO communication states that "India maintains that the measures taken by the US are not consistent with the GATT 1994 and AoS," and notes that because consultations under the Agreement on Safeguards have not resolved the issue, India "reserves the right to suspend concessions or other obligations that are substantially equivalent to the adverse effects of the measure to India's trade." This classification dispute is crucial because safeguard measures trigger specific rights for affected countries under WTO rules, including the right to rebalance trade concessions. By formally notifying its intent to retaliate, India has initiated a 30-day waiting period before potentially implementing its counter-tariffs. The Indian government has also reserved the right to "withdraw, modify, supplement or replace this notification" and adjust both the targeted products and tariff rates, giving it flexibility to calibrate its response as the situation evolves or negotiations progress.

Bilateral Trade Relations Face Complex Crosscurrents

This dispute unfolds against a backdrop of ongoing efforts to strengthen US-India economic ties. Both countries are currently negotiating a bilateral trade agreement, with an Indian delegation scheduled to visit the US this week for trade talks. The timing of India's WTO notification introduces additional complexity to these negotiations, potentially serving as leverage but also risking further complications. This is not the first time India has retaliated against US metal tariffs. In June 2019, following the original 2018 tariffs, India imposed customs duties on 28 US products, including agricultural goods like almonds and walnuts. That earlier retaliation remains in place, making the newly proposed measures an expansion of existing trade barriers. The dual-track approach of simultaneous negotiations and confrontation reflects the multifaceted nature of US-India relations, where strategic partnership coexists with significant trade frictions. How both countries manage this specific dispute could influence not only the broader bilateral relationship but also the functioning of the rules-based trading system.

Global Implications Extend Beyond Bilateral Relationship

India's challenge to US metal tariffs carries significance beyond the bilateral relationship, touching on fundamental questions about the global trading system's future. The US justification of tariffs on national security grounds has been controversial since 2018, with many countries viewing it as potentially opening the door to widespread protectionism disguised as security measures. Article XXI of GATT, the national security exception, has historically been invoked rarely and with restraint. Its expanded use in recent years has raised concerns about undermining WTO disciplines. India's formal challenge joins similar actions by other major economies, including the European Union and China, creating a coalition of countries pushing back against this interpretation of trade rules. The outcome of these disputes could establish important precedents regarding the balance between national security prerogatives and international trade commitments. Additionally, the case highlights growing assertiveness among developing economies in defending their trade interests through WTO mechanisms, even as the organization itself faces existential challenges with its dispute settlement system partially paralyzed.

Economic Impact Assessment Reveals Substantial Stakes

The economic stakes in this dispute are considerable for both countries. According to the WTO communication, the US safeguard measures affect $7.6 billion of Indian exports, with estimated duty collection of $1.91 billion. India's proposed retaliation aims to match this impact precisely, targeting an equivalent value of US exports. The metal sectors in both countries employ hundreds of thousands of workers, making the dispute politically sensitive. For India's steel industry, which has been expanding production capacity and seeking export markets, the US tariffs represent a significant barrier to a major potential destination. The dispute also affects downstream industries that use steel and aluminum as inputs, potentially raising costs for manufacturers in both countries. Beyond the immediate sectors involved, the broader economic relationship encompasses approximately $150 billion in annual bilateral trade, with significant potential for growth if barriers can be reduced. The proposed retaliatory measures thus represent both a specific response to metal tariffs and a negotiating tool in the larger economic relationship.

Procedural Next Steps Create Window for Negotiated Solution

India's WTO notification outlines a clear procedural path forward while leaving room for diplomatic resolution. The communication states that India reserves its right to implement retaliatory measures after a 30-day notification period, creating a window for potential negotiations before tariffs take effect. It also specifies that India will inform both the WTO Council for Trade in Goods and the Committee on Safeguards of its next steps, maintaining institutional engagement through proper channels. This approach follows WTO procedures while maximizing flexibility for India to adjust its response based on US actions or bilateral discussions. The notification's timing, coinciding with scheduled trade talks, suggests India may be using the threat of retaliation as leverage to secure concessions in ongoing negotiations. Both countries now face choices about whether to escalate the dispute through implementation of additional tariffs or seek compromise through the bilateral trade agreement negotiations. The outcome will depend on political calculations in both capitals about the relative importance of trade principles versus practical economic interests.

Historical Context Reveals Pattern of Trade Tensions

The current dispute represents the latest chapter in a recurring pattern of trade frictions between India and the United States. The first Trump administration's 2018 decision to impose metal tariffs triggered India's initial retaliation in 2019, targeting 28 US products with higher duties. India also filed a WTO complaint at that time, which has progressed slowly through the organization's dispute settlement process. Beyond metal tariffs, the countries have engaged in multiple trade disagreements in recent years, including disputes over digital services taxes, market access for agricultural products, and intellectual property protection. Despite these tensions, bilateral trade has continued to grow, reflecting the economic complementarities between the two large economies. The pattern suggests a relationship characterized by pragmatic engagement despite recurring disagreements on specific trade policies. The current dispute thus fits within a broader context of managed trade friction, where both sides assert their interests forcefully while maintaining dialogue and avoiding broader economic disengagement.

Key Takeaways:

• India has formally notified the WTO of plans to impose retaliatory duties targeting $7.6 billion of US imports with $1.91 billion in tariffs, precisely matching the estimated impact of American steel and aluminum tariffs on Indian exports

• The US maintains its 25% steel and 10% aluminum tariffs are national security measures rather than safeguards, while India argues this classification attempts to circumvent WTO rules requiring temporary application and compensation

• The timing of India's announcement coincides with ongoing bilateral trade agreement negotiations, with an Indian delegation visiting the US this week for talks, potentially using the threat of retaliation as leverage