Latest hike of steel, aluminum tariffs slammed as 'lose-lose' for businesses in both US and India

Businesses in both India and the United States will be negatively impacted after the US administration doubled tariffs on steel and aluminum to 50 percent on May 30, analysts said.

The US policies are mutually harming and, thus, "manufacturers and entrepreneurs in India are apprehensive" of US moves, said Karori Singh, former director and an emeritus fellow of the South Asia Study Centre at the University of Rajasthan in India.

Considering the uncertainty and assertiveness in US trade policies, India is adopting a two-pronged strategy to expedite free trade agreements with various countries and regions, such as the United Kingdom and European Union, according to Singh.

The Global Trade Research Initiative (GTRI), a New Delhi-based think tank, stated that the consequences of increased US tariffs on steel and aluminum will have a direct impact on the Indian economy.

According to the GTRI, India exported $4.56 billion worth of iron, steel, and aluminum products to the US in 2024-25, while India imports nearly $2 billion worth of products including iron, steel, and aluminum from the US.

The GTRI warned that the higher tariffs announced by US President Donald Trump will negatively affect Indian manufacturers and exporters, potentially affecting their competitiveness and profitability in the US market.

"We have barely settled down after the March announcement of sectoral tariff. How can we do business with such uncertainty in tariffs?" Pankaj Chadha, chairman of EEPC India, told The Hindu newspaper. EEPC India, or the Engineering Exports Promotion Council, is the trade and investment promotion body for the engineering sector sponsored by India's Ministry of Commerce & Industry.

Indian exporters now "need to diversify to other markets", Chadha added.

"It remains to be seen whether India will carry out the retaliation by increasing tariffs on certain US exports within a month," GTRI founder Ajay Srivastava was quoted as saying by local media.

Singh said trade negotiations between India and the US were at an advanced stage, noting that India's Commerce Minister Piyush Goyal traveled to Washington, DC, for talks in May.

"Though the trade deal between India and the US is on a win-win mode, Trump's recent increase of tariffs on steel and aluminum to 50 percent is again impinging upon Indian exports to the US," Singh added.

On May 12, India notified the World Trade Organization of potential retaliatory measures in response to US tariffs on steel and aluminum.

India vowed to impose "an equivalent amount of duty collected from products originating in the United States" as part of its proposed suspension of concessions.

The need for expanding trade and intensifying techno-economic partnership was emphasized as part of the joint statement when Indian Prime Minister Narendra Modi visited the US in February.

Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore's Business School, said the US decision to double tariffs was "lose-lose".

He also said the move is clearly protectionist and violates the norms of free international trade.

"India, in particular, will take the full brunt of the new move as the US is a leading importer of steel and aluminum from the country," he said.

Loh also said that for US businesses, the tariffs will drive up costs as many rely on steel and aluminum in their products. As a result, many may lose their global competitiveness, he said.

"US consumers, too, will face higher prices as steel and aluminum are present in many household items," said Loh. "The US tariffs continue to be lose-lose for all countries and reflect badly on the credibility of the US governance leadership."

Singh, from the University of Rajasthan, similarly pointed out Trump's decision will not only affect major steel, iron, and aluminum exporting countries such as India but also manufacturers in the US, whose global competitiveness will be reduced.

He warned that the tariffs could see imported steel costing US companies up to triple the price of steel in the domestic market of other countries.