NEW DELHI: Indian steel producers may find their export prospects trumped by the US decision to impose an additional 25 per cent tariff on all steel and aluminium imports, Moody’s Ratings warned on Monday. The move, reminiscent of former President Donald Trump’s 2018 trade policies, is expected to increase competition and worsen oversupply in global steel markets, adding pressure on Indian steel exporters.
“Over the past 12 months, high steel imports into India have already dampened prices and earnings of domestic producers,” said Hui Ting Sim, assistant vice president at Moody’s Ratings.
Escalating trade tensions
Data from the Global Trade Research Initiative (GTRI) reveals that since the US-China trade war began in 2018, American steel and aluminium imports have continued to rise. In 2024, primary steel imports surged to $33 billion, up from $31.1 billion in 2018. The largest suppliers were Canada ($7.7 billion), Brazil ($5 billion), Mexico ($3.3 billion), China ($550 million) and India ($450 million).
GTRI founder Ajay Srivastava noted that if Trump follows his earlier strategy, tariffs could again be used as leverage in trade negotiations. “The 2018 tariffs were widely seen as an aggressive move to pressure trading partners into making concessions. If similar measures are reintroduced, they could trigger new trade disputes and retaliatory actions,” Srivastava said.
Impact on Indian steel
Moody’s predicts that higher tariffs will boost US steelmakers by raising domestic demand and pushing up prices. However, for Indian exporters, the barriers will intensify.
“The US tariffs on steel will increase competition and exacerbate oversupply in other steel-producing markets. Indian steel producers will struggle to find alternative buyers, squeezing their margins further,” Moody’s Hui Ting Sim added.
During Trump’s presidency, the US had imposed an additional 25 per cent duty on steel and 10 per cent on certain aluminium products in 2018. India retaliated a year later by raising tariffs on 28 American goods.
After years of negotiations, the US removed tariffs on Indian steel and aluminium on July 3, 2023, as part of a broader trade resolution during Prime Minister Narendra Modi’s Washington visit. The deal was seen as a significant thaw in trade relations, with India agreeing to open its market further to US goods.
However, with Trump considering a return to aggressive protectionist trade policies, the world is watching closely. “If history repeats itself, the US steel and aluminium industries may gain in the short term, but global trade frictions could escalate, leading to long-term economic consequences,” Srivastava warned.
