India is among the ten countries most affected by former US President Donald Trump’s recent decision to impose a 25% tariff on all steel and aluminium imports.
The move, which aims to protect American manufacturers, is expected to reshape global trade flows, disrupt supply chains, and push countries towards alternative strategies.
While Canada, China, and Mexico top the list of affected nations, India’s $4 billion steel and aluminium exports to the US mean that its industries will face significant challenges.
As global trade partners brace for the impact, this protectionist measure could trigger retaliatory actions, trade diversifications, and price shifts in key industries.
Steel and aluminium trade realignments
The US is one of the largest importers of steel and aluminium, with these materials essential for industries ranging from construction to automotive manufacturing.
The new tariff policy alters the competitive landscape, particularly for countries heavily reliant on US demand.
Canada, the largest exporter to the US, will likely seek exemptions, while China, which exported $13.86 billion worth of steel and aluminium in 2023, may accelerate its push towards self-sufficiency and alternative markets.
India, which ranks eighth among the affected nations, exports a significant portion of its steel and aluminium output to the US, with industries such as automotive and infrastructure depending on these trade flows.
With higher tariffs making Indian steel less competitive in the US market, manufacturers may look to Europe, Southeast Asia, and domestic projects to offset losses.
India could also benefit if US buyers look for alternative suppliers outside of China and Canada, given ongoing geopolitical tensions.
Potential retaliatory measures and market shifts
History suggests that sweeping tariffs often trigger countermeasures.
The European Union, which is directly affected through Germany and Italy’s exports, could impose reciprocal tariffs on US goods, heightening trade tensions.
Similarly, Mexico, which has a trade surplus with the US, may seek compensation through policy adjustments.
India, which has previously responded to US tariff actions with its own import duties, may take a measured approach, assessing the impact before deciding on retaliatory steps.
Emerging markets could also stand to gain from shifting trade flows.
Countries in Southeast Asia, particularly Vietnam and Indonesia, have been increasing their steel and aluminium production capacity.
If US importers seek alternatives, these nations may absorb some of the demand previously met by India, China, and Brazil.
The broader impact on global industries
The steel and aluminium tariffs are expected to send ripple effects across global industries.
Automobile manufacturers, which rely heavily on imported metals, may see production costs rise.
Higher input costs could push companies like Ford and General Motors (NYSE:GM) to reassess supply chains, while Asian automakers such as Hyundai and Toyota (NYSE:TM) might seek cost-effective sourcing solutions outside the US.
The infrastructure and energy sectors, which depend on steel and aluminium for construction and renewable energy projects, could experience cost fluctuations.
As raw materials become more expensive, global investments in green energy and large-scale infrastructure developments may require strategic adjustments to manage increased expenses.
With Trump’s tariff policy shifting the balance of global trade, affected nations must navigate economic pressures, supply chain disruptions, and potential retaliatory measures.
India, while facing short-term challenges, may turn the crisis into an opportunity by strengthening domestic manufacturing and diversifying trade partnerships.
The long-term effects will depend on how global markets react and whether further trade restrictions follow in the future.