Government sources have termed the United States’ concerns over potential Indian retaliation on steel and aluminium tariffs as “baseless.” While both sides continue to discuss the matter bilaterally and at the World Trade Organization (WTO), Indian officials indicated that the legal uncertainties created by recent US court rulings will need to be factored in before deciding the next steps.
Sources noted that the US still retains the authority to impose additional tariffs using other legal provisions such as Sections 301, 128, and 228. India, they said, will have to weigh these possibilities before charting a way forward.
Describing the US as an important partner, with whom India has both a trade surplus and strong energy ties, officials said that India could source shale gas, LNG, and crude oil from the US to help reduce the bilateral trade deficit. This, they added, would also diversify India’s energy basket.
Ahead of a key visit by the American negotiating team to Delhi on 4th June, sources reminded that the 9th July deadline for the applicability of reciprocal tariffs is currently under a temporary stay. India remains engaged in efforts to finalise an interim trade deal before that date to avert any escalation.
On 21st May, officials had indicated that India is aiming for a full exemption from the 26% additional tariffs under discussion. The interim deal is expected to cover goods and digital services. While the Trump-era US administration lacked authority to reduce tariffs below the most-favoured nation (MFN) level without Congressional approval, reciprocal tariffs can still be lifted for specific countries, including India.
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Officials attributed India’s growing exports to the US to the benefits of differential tariffs and said Indian products face fewer non-tariff barriers (NTBs) in the US than in the European Union. Recent issues concerning Indian mango exports have also been resolved.
Meanwhile, the US has sought greater market access in sectors such as industrial goods, automobiles, wines, petrochemicals, dairy, and other agricultural products.
India, in turn, is aiming to secure import quotas or a Minimum Import Price (MIP) for sensitive categories like dairy and agriculture. It is also seeking a 5–7% reduction in Basic Customs Duty (BCD) for its labour-intensive exports, including leather.
Both nations are looking to double bilateral trade to $500 billion by October 2025, with plans to sign the first tranche of a multi-sector bilateral trade agreement (BTA) by then.
