India pursues bilateral consultations on US steel & aluminium tariffs

India has initiated consultations at the WTO over the US’ fresh 25% tariffs on steel and aluminium, while simultaneously engaging in bilateral discussions to resolve the issue. The US maintains that the duties fall under its national security law, not safeguard measures, but is open to dialogue.

Image Source: Freepik

India’s ongoing challenge at the World Trade Organisation (WTO) against the United States’ additional tariffs on steel and aluminium continues to progress, even as New Delhi opens a parallel track of bilateral discussions. According to a senior official, this issue is expected to surface in a meeting scheduled for next week.

Earlier this month, India formally sought consultations at the WTO under its dispute settlement framework. This came in response to Washington’s decision to impose additional duties of 25% on steel and aluminium imports from March 12. The consultations request marks the initial step in the WTO’s dispute resolution process and aims to reach a mutually agreeable settlement. If these talks fail to yield results, India has the option to escalate the matter by requesting the establishment of a dispute settlement panel empowered to adjudicate the issue.

In response to India’s complaint, the US stated that the duties in question were not “safeguard measures” but actions taken under its national security law. “These actions are not safeguard measures and, therefore, there is no basis to conduct consultations under the Agreement on Safeguards with respect to these measures,” the US said. However, Washington has signalled its openness to resolving the issue through bilateral dialogue and is willing to engage on “any other issue regarding trade and tariffs“.

This latest disagreement echoes a similar episode in 2018 when the Trump administration imposed comparable tariffs on steel and aluminium, prompting India to retaliate in 2019. In response, New Delhi levied additional tariffs on a range of US imports including almonds, apples, chickpeas, lentils, walnuts, boric acid, and diagnostic reagents, among others, covering 21 products in total. Both sets of measures were subsequently challenged by the other party at the WTO.

In a bid to reset trade ties, both countries had made efforts to resolve ongoing trade disputes in 2023. During Prime Minister Narendra Modi’s visit to the United States, under the Biden administration, India and the US agreed to withdraw all active WTO cases, including those related to steel and aluminium tariffs and the retaliatory duties imposed by India. In total, seven WTO cases were resolved through mutual agreement.

Aside from the steel and aluminium disputes, several other trade disagreements between the two countries have played out at the WTO. Among these is the US challenge to India’s export incentive schemes. Additionally, the US filed complaints regarding India’s measures affecting solar cells and modules, as well as broader policies relating to the renewable energy sector. India, in turn, contested the US’ countervailing measures on certain hot-rolled carbon steel flat products. Other cases have included disputes over additional duties on specific products from both sides.

Despite the withdrawal of earlier cases, the re-emergence of new tariffs and India’s fresh WTO complaint indicate ongoing friction in bilateral trade ties. However, both governments appear willing to maintain dialogue and pursue both multilateral and bilateral channels to find common ground. The upcoming meeting could provide a forum to further these efforts, potentially leading to a negotiated settlement without resorting to full dispute adjudication.