Trump tariff hikes: Indian steel producers in for tough times, says Moody’s

The rating agency says steel producers will face increased challenges in exporting their products after the US decision to impose an additional 25 per cent tariff on all steel and aluminium imports

New Delhi: Moody’s Ratings on Monday said Indian steel producers will face increased challenges in exporting their products following the US decision to impose an additional 25 per cent tariff on all steel and aluminium imports as announced by President Donald Trump.

Over the past 12 months, high steel imports into India have already dampened prices and earnings of steel producers in India, said Hui Ting Sim, assistant vice president at Moody’s Ratings.

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As per think tank Global Trade Research Initiative (GTRI) data, since the trade war began in 2018, US steel and aluminium imports have continued to rise. Primary steel imports increased to USD 33 billion in 2024 from USD 31.1 billion in 2018.

The largest suppliers in 2024 were Canada (USD 7.7 billion), Brazil (USD 5 billion), and Mexico (USD 3.3 billion). Imports from China and India were USD 550 million and USD 450 million, respectively.

“If Trump follows the same playbook, the return of tariffs on steel and aluminium could be used as leverage in trade negotiations. The 2018 tariffs were widely seen as an aggressive strategy to force trading partners into concessions. The latest move, if implemented, could lead to new trade disputes and retaliatory measures from affected countries,” GTRI Founder Ajay Srivastava said.

Moody’s said it expects the tariffs will benefit steel producers in the US by increasing demand for domestic steel and raising their selling prices.

Trump on Sunday said he will announce the new tariffs for steel and aluminium imports on Monday. Trump also reaffirmed that he would announce “reciprocal tariffs” — probably Tuesday or Wednesday — meaning that the US would impose import duties on products in cases where another country has levied duties on US goods, said news reports.

“The US tariffs on steel will increase competition and exacerbate oversupply at other steel-producing markets. Indian steel producers will face increased challenges in exporting their products,” Hui Ting Sim said.

Earlier in 2018 under the Presidency of Trump, Washington had imposed an additional 25 per cent import duty on steel products and 10 per cent on certain aluminium products. In retaliation, India in June 2019, imposed additional customs duties on 28 American products.

More than five years after the initial tariffs were imposed, on July 3, 2023, the US removed tariffs on steel and aluminium imports from India.

GTRI in its report said the decision was part of a broader trade resolution announced during Prime Minister Narendra Modi’s visit to Washington. The agreement marked a thaw in trade relations between the two countries, with India committing to open its market further to US goods.

“As Trump considers reviving his aggressive trade policies, the world will be watching closely. If history repeats itself, the US steel and aluminium industries may benefit in the short term, but global trade frictions could intensify, with lasting economic consequences,” Srivastava said. PTI