Home |Business |Indian Steelmakers Face China Dump As Trumps 25 Tariff Takes Effect On March 12
Indian steelmakers face China dump as Trump’s 25% tariff takes effect on March 12
The tariff is expected to slash steel exports to the US by 85 per cent, creating a massive surplus that will likely flood India which is one of the few major markets without trade restrictions, says industry body
Hyderabad: As President Donald Trump’s 25% tariffs on imports from Mexico and Canada kicked in from March 4, the fallout from tariffs on steel imports is palpable.
Trump had ordered a 25% import tax on all steel and aluminium entering the US from countries including Canada, the EU and China from this month.
“I have determined that steel articles imports from these countries threaten to impair the national security, and I have decided that it is necessary to terminate these arrangements as of March 12, 2025,” Trump said in an executive order.
How worried then Indian steelmakers should be?
Indian Steel Association president Naveen Jindal recently said in a statement, “This latest tariff is expected to slash steel exports to the US by 85 per cent, creating a massive surplus that will likely flood, India which is one of the few major markets without trade restrictions.”
Since exporting steel to the US will become expensive, companies in countries like China will redirect their produce to India, threatening domestic industry with price crashes and unfair competition. The US is the world’s largest importer of steel, with Canada, Brazil, and Mexico as its top three suppliers.
But with cheaper steel, will consumers not benefit?
“All end users of steel, including construction companies and automobile companies, will benefit from cheaper steel imports. But tariffs will definitely have an inflationary effect, including on ordinary Indian households. This is why in the past automobile companies have argued that protection for domestic steel producers has made our car production uncompetitive globally,” says Mihir S Sharma, Director, Observer Research Foundation.
Over the past 12 months, high steel imports into India have already dampened prices and earnings of steel producers in India, according to Moody’s Ratings.
India’s finished steel imports during April-October, 2024, hit a seven-year high at 5.7 million tonnes. During April-September 2024, China was the lead exporter of finished steel to India, according to a Reuters report.
The industry is also worried because Chinese excess capacity affects not just direct imports from China but also forces steel companies in Korea or Vietnam to export to India. “Any company will lobby to protect their margins — why steel is such a particular flashpoint is because the sector is both strategically important and such a major input into other vital sectors like construction,” says Sharma.
According to Jindal, India’s carbon steel exports to the US are already negligible due to longstanding anti-dumping duty and countervailing duty measures, and this decision will only add to the misery.
Steel Secretary Sandeep Poundrik, however, dismissed any adverse impact on exports. Speaking at an event recently, he said: “The US President has said about putting tariffs on steel. How much steel actually we export to the US? We produced 145 million tonnes of steel last year, of which 95,000 tonnes was exported to the US. So, how does it matter if out of 145 million tonnes, you are not able to export 95,000 tonnes.”
As per official data, India’s steel exports shrunk 28.9 per cent to 3.99 million tonnes during the April-January period of FY25, compared with 5.61 million tonnes in the corresponding period of the previous fiscal.
Call for safeguard duties
The Indian Steel Association has already sought safeguard duty from the government instead of anti-dumping duty because the latter will take time to operationalise. “We are asking for safeguard duties, which can be imposed immediately to help us,” Tata Steel’s managing director TV Narendran said recently as quoted by PTI.
Steelmakers want protection measures so that their investment plans do not derail. Sharma believes Indian steel companies are correct to argue that this is the point at which they need to make major investments to meet projected steel demand in India over the next decade. “Major investments have already been announced. If their margins fall, those capex decisions might indeed be postponed, which could cause us to become even more dependent on steel imports,” he says.
The country needs about 300 million tonnes of steel production capacity by 2030, requiring an additional 120 million tonnes from the current levels to power its urbanisation, infrastructure and industrial growth.