India reserves only the right to impose a retaliation obligation on U.S. goods; issues can be resolved through BTA conversations

India “only” retains the right to WTO norms, demanding retaliatory duties on certain U.S. products for U.S. steel and aluminum tariffs, and it may choose to resolve the issue through ongoing bilateral trade agreement (BTA) negotiations between the two countries. India has also issued similar notices to the EU through steel safeguards for 2019 and 2021, but has not been implemented so far, the official said earlier.

“Therefore, India’s notice to the WTO Trade and US Trade Commission only retains India’s rights, which is an agreement to retaliate on any future date under the safeguards agreement. However, India is in order to decide whether these proposed retaliation are valid, or whether to retaliate after 30 days, or to continue as part of the BTA, or as part of the official conduct.

Business and Industry Minister Piyush Goyal will start bringing a team of Indian officials to Washington on May 17 to discuss the proposed BTA with their U.S. counterparts. The main negotiators of the two countries will meet from May 19 to 22.
The two countries are negotiating the agreement to increase two-way business by 2030 from the current $191 billion to $500 billion.

According to trade experts, India’s move to retain its right to retaliate can serve as a bargaining chip in a proposed trade agreement.

This is not India’s first revenge brush. In June 2019, India imposed higher tariffs on 28 U.S. products on the General Preference System (GSP) and continued to continue 25% and 10% tariffs on certain steel and aluminum products. The operation covered about $240 million in trade value, marking the first time India has used WTO-approved retaliation. However, those duties were withdrawn in September 2023 after the two countries decided to resolve the seven WTO disputes.

At that time, the United States initially imposed additional responsibilities on certain steel (25%) and aluminum (10%) products in March 2018. On May 18, 2018, India notified India of the Indian Commodity Trade Commission, which proposed to suspend preferential offers.

The notice reserves the right to implement the proposed moratorium in India, however, it was implemented in India one year after June 2019.

“In addition, regarding EU authoritative steel safeguards, India has notified the WTO of the WTO of India’s proposed suspension, retaining its right to implement it. The proposed suspension has been suspended to date.”

The proposed concession suspension could be in the form of tariff increase on selected U.S. products. Although India has not disclosed the items yet, in a similar move in 2019, it imposed retaliatory tariffs on 28 U.S. products, from almonds and apples to chemicals.

The notice issued on May 12 marks India’s invocation of its rights under the WTO Safeguards Agreement (AOS).

This law provides for retaliation when another member takes safeguards without proper notice or consultation.

India sought consultations with the U.S. in April, but Washington replied that tariffs were levied on national security grounds and should not be considered a safeguard.

According to WTO notice, the U.S. security tax affects approximately 7.6 billion Indian exports, resulting in an estimated additional tariff collected by the U.S. at $1.91 billion.

India intends to recover the money through its retaliation duties on selected American goods.