The recent trade agreement between India and the United States has been celebrated, promising to lower many reciprocal tariffs to a more agreeable 18 percent. However, a closer look reveals a significant catch: roughly a tenth of India’s exports to the US, valued at a hefty $8.3 billion, will continue to face steep tariffs of 25 percent or more.
Why the exception? These tariffs aren’t part of the typical trade negotiations. They stem from a US law called Section 232, enacted way back in 1962, which allows for duties on goods deemed crucial for national security. This means that even with a new deal, strategically sensitive items like steel, aluminium, and automobiles from India are still under a special lens.
In 2024 alone, India shipped $8.3 billion worth of these “sensitive” goods to the US, representing over 10 percent of its total $80 billion exports to America. Automobiles lead the pack, with nearly $4 billion in exports facing these duties, followed by steel at $2.5 billion and aluminium close to $800 million. For some of these, like specific aluminium and steel products, the tariff can even skyrocket to 50 percent!
Experts are urging caution. Organizations like the Global Trade Research Initiative (GTRI) warn that while the deal benefits some sectors, others, particularly those facing Section 232 duties, will continue to struggle. GTRI also casts doubt on ambitious claims of India importing $500 billion worth of US goods, calling it a long-term aspiration rather than a short-term reality.
So, while the India-US trade deal marks progress, it’s clear that key Indian industries still navigate a complex landscape of higher tariffs, reminding us that trade agreements often come with intricate exceptions.
Source: https://www.khaleejtimes.com/world/asia/india-us-trade-deal-indian-exports-still-face-higher-tariffs
