Ahead of Prime Minister Narendra Modi's American trip, US President Donald Trump has vowed to impose 25 per cent tariffs on steel and aluminium imports entering the country. It is not clear when the tariffs would take effect.
After Finance Minister Nirmala Sitharaman announced slash on duties during the Union budget 2025-26, Modi is gearing up for fresh tariff cuts ahead of his scheduled meeting with Trump on February 12 and 13.
Ahead of his visit, Modi said the US trip would be "an opportunity to build upon the successes of our collaboration in his first term and develop an agenda to further elevate and deepen our partnership, including in the areas of technology, trade, defence, energy, and supply chain resilience."
Would Trump's tariff cuts impact India?
Trump's tariff threats have triggered worries about the disruption of supply and demand of steel and aluminium in the Indian market. If the expenditure of exporting these metals to the US increases considerably, it could also slash the profit margin of the metal-exporting companies.
In the past, Trump has referred to India as a "very big abuser" on trade and a "tariff king". The PM is expected to discuss disagreements on tariffs and ink new deals to cajole Trump and avoid a potential trade war. The US president had earlier urged India to procure more American security equipment to reduce the country's trade deficit.
The average US tariff rate is just 2.2 per cent while India's average tariff rate is 11 per cent, which was brought down from 13 per cent during the Union Budget on February 1.
India's US exports account for more than 18 per cent of its total exports. Besides petroleum products, pharmaceuticals, medical appliances, textiles, telecom instruments, electronic components and precious stones, India also exports iron and steel articles, metals and coins. In FY 2023, India exported $77.5 billion worth of goods to the US.
On the contrary, India's imports from the US is just 6 per cent of its total imports. India imports petroleum crude, military equipment, aircraft parts and electrical machinery from the US.
India is planning to slash tariff in sectors like medical equipment, electronic items and chemicals. These include goods that are sourced primarily from the US, including dish antennas and wood pulp, reported Reuters.
The Nifty Metal index plunged around 3 per cent to 8319.80 at 10.10 am. Vedanta sank 4.5 per cent, Steel Authority of India Ltd (SAIL) plummeted 4.2 per cent, Tata Steel dropped 3.6 per cent, JSW Steel 3.1 per cent, National Aluminium Company (Nalco) 3.1 per cent, Hindalco 3 per cent and Jindal Steel 2.9 per cent.
