India proposes first counter move against Trump tariffs, submits notice to WTO

India has formally taken its first retaliatory step against US President Donald Trump’s tariff regime by submitting a notice to the World Trade Organization (WTO) proposing counter-duties on selected American goods.

The move comes as trade talks between the two nations enter a sensitive phase, with both sides seeking to finalise a comprehensive bilateral deal by late 2025

What India has proposed?

In a notification dated 12 May 2025, India informed the WTO of its intent to “suspend concessions or other obligations” under global trade rules, in response to the United States’ tariffs on imported steel and aluminium. According to Reuters, India stated that the US duties would affect $7.6 billion worth of Indian exports, resulting in an estimated $1.91 billion in additional tariffs.

As per WTO rules, India is entitled to impose retaliatory duties equal to the value of the damage caused, although it has yet to specify which US products would be targeted.

Trump’s tariff saga

The tariff tensions between India and the US escalated sharply in recent months. In March 2025, President Trump extended his earlier tariff policy by reimposing 25 per cent duties on all steel and aluminium imports, including those from India, according to a Reuters report. This action revived the tariff mechanism first deployed during Trump’s initial term in 2018 under Section 232 of the Trade Expansion Act.

Then in April 2025, the United States imposed an additional 26 per cent “reciprocal tariff” across a broad range of Indian exports, citing India’s historically high import duties. According to Reuters, this round of tariffs impacted key Indian sectors such as electronics, gems and jewellery, aluminium components, and auto parts — industries that previously benefited from US tariffs averaging below 2 per cent.

The sharp increase in costs rendered Indian goods less competitive in the American market, leading to a noticeable dip in export volumes, as noted by trade analysts.

A shift in India’s approach

Until recently, India had chosen to respond diplomatically to the Trump administration’s protectionist moves. Earlier this year, New Delhi slashed import duties on more than 8,500 industrial products, including premium American exports, in an effort to reduce tensions and pave the way for a smoother trade agreement.

But with the latest wave of tariffs and Trump’s public remarks linking US-India trade ties to the recent ceasefire between India and Pakistan, New Delhi’s tone has notably hardened.

What lies ahead?

India’s countermeasures come at a precarious time. Both nations are in the final stretch of negotiating a bilateral trade agreement, with India reportedly offering to narrow its tariff gap with the US by nearly two-thirds.

But this tit-for-tat move may complicate the discussions. While the WTO permits such retaliation under its safeguard rules, any escalation could undermine the spirit of cooperation both countries have sought to maintain in recent months.

As the world’s largest and oldest democracies try to balance protectionism and partnership, the coming weeks will determine whether diplomacy or trade disruption shapes the future of India-US economic relations.