WHY IS INDIA SEEKING TO IMPOSE RETALIATORY TARIFFS ON U.S.?

Retaliating to the U.S. imposing 25% tariffs on imports of steel and aluminium earlier in March, India notified the World Trade Organisation (WTO) last week of its intent to place tariffs on $7.6 billion worth of imports from the country across the Atlantic.

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New Delhi held that the measure estimated to rack up $1.91 billion in duties would mirror the impact on their exports of steel and aluminium because of Washington's tariffs. The development transpired days before the two countries informed about having expedited progress towards the first tranche of the bilateral trade agreement. The reciprocative measures come into effect thirty days from the date of notification, that is, May 9.

What all has happened in the recent past?

Into his second term, U.S. President Donald Trump this March reinstated 25% tariffs on all steel and aluminium being imported into the country. This was alongside eliminating all country and product-specific exemptions. He argued the move meant to protect domestic industries being reportedly "harmed by unfair trade practices and global excess capacity". The 45th U.S. President endowing paramount focus on pursuing protectionist policies is widely acknowledged and not anything new. Mr. Trump had earlier instituted tariffs on the two commodities back in March 2018 during his first term. Steel was subject to 25% tariffs whilst aluminium 10%.

India first moved for retaliatory measures only in June 2019 when Washington removed it from their Generalised System of Preferences (GSP), citing unresolved issues. For perspective, GSPs are unilateral, non-reciprocal and non-discriminatory benefits extended by economically better economies to developing countries. Disapproving of the exclusion as "unfortunate", India imposed retaliatory tariffs on 28 items of import (from the U.S.) as apples, walnuts and almonds, among others.

Later in 2020, albeit unrelated to the prior development, U.S. expanded the scope of the regime to also cover derivatives of the two metals.