Trade Barriers

Indian steelmakers see red over US steel import tariff hike

Urge US to analyse motive of steel producing nations before imposing trade barriers

trump-afp US President Donald Trump speaks on steel and aluminum tariffs during a meeting with industry leaders in the Cabinet Room of the White House on March 1, 2018 | AFP

As the Donald Trump administration frowns against steel imports for meeting its defence needs, Indian steelmakers fear that the move may cause "major shifts" in global trade flows for steel and steel products.

The US Congress had initiated an investigation to be conducted by the US Department of Commerce, pursuant to Section 232 of the Trade Expansion Act of 1962 (amended), before deciding on clubbing all steel exporters to the US under a 25-per cent duty tariff, up from the existing 10 per cent.

"Imposition of steep tariffs on the import of steel by the US will inevitably encourage steel-surplus nations to divert their exports to vibrant consumption centres like India and distort our domestic markets considerably," said Bhaskar Chatterjee, secretary general, Indian Steel Association, which represents 60 per cent steel producers in the country.

Apparently, India, though the third-largest producer of steel globally, has among the lowest per capita domestic demand at 65 kg for steel and steel products. India accounts for only about two per cent of US steel imports and reserves a majority of its production to meet a growing appetite for steel at home.

"Clubbing a steel non-mature country like India with other steel surplus countries is not appropriate," stated Chatterjee in a statement by ISA. Indian steel producers already face 16 trade barriers, which include 10 anti-dumping duties and six countervailing duties. "This adversely dents the growth prospects of a developing country like India whose production and consumption is inward-looking," ISA stated.

Maintaining that Indian steel firms had always adhered to global trade regulations and WTO framework while exporting to the US, Chatterjee said, "It is for a reason that in December 2016, the United States has bestowed the privileged status of 'major defence partner' on India, which is a position unique to India alone."

The ISA has sought a “nuanced distinction” for Indian steelmakers, prior to imposition of across-the-board tariffs, purely to be levied on the basis of a country's motivation to produce steel.

In this year's Union budget, Finance Minister Arun Jaitley had looked to protect domestic steel producers from market distortion caused by cheaper steel product imported from China. A decision by the US government to impose across-the-board tariff would imply a failure of the Indian government's motives to encourage domestic steelmakers for jobs and economic growth and to deter dumping of Chinese steel in the country.