The Finance Ministry of India announced on Monday that it would be imposing a 12 percent tariff on some steel products — a move apparently intended to prevent China from “dumping” large amounts of steel into the Indian market and elbowing domestic companies out of business.
Indian officials had floated the potential of a 12 percent “safeguard duty” in late March in anticipation of news that the United States could impose tariffs that would lead China to see alternative markets to America for products that Americans would no longer want to buy at higher prices. President Donald Trump announced a wave of reciprocal tariffs on nearly every country that does business with America on April 2, including India, but has since suspended all but the tariffs on China, which he has increased. Trump has increased tariffs on Chinese goods to 145 percent and threatened to raise them to as high as 245 percent.
The Hindu nationalist government of Prime Minister Narendra Modi, which has dedicated much of its economic policy to usurping China’s position as the world’s largest manufacturing state, has embraced President Trump’s policies even as it faces a potential 34 percent tariff if New Delhi does not broker a deal with Washington following the end of a 90-day pause period. Indian Commerce Minister Piyush Goyal called the tariffs the “opportunity of a lifetime” for India, noting that other countries faced much steeper tariff rates and are in less favorable positions to negotiate.
India announced the new tariffs on Chinese steel on Monday during a visit by Vice President JD Vance and his family to the country. Vance announced in a subsequent speech on Tuesday that America and India had agreed to the terms of negotiations for a new trade deal, the first major step in restructuring the bilateral economic relationship.
The Finance Ministry justified the “safeguard duty” — a kind of tariff meant to protect local industry — as necessary to protect domestic steel companies from unfair foreign competition. The statement did not specifically mention China as the target of the tariffs, though the large percentage of the market that it controls makes it a clear target for such a duty.
“A flood of Chinese steel in recent years has pushed some Indian mills to scale down operations and mull job cuts, and India is one of a number of countries to have contemplated action to stem imports to protect local industry,” Reuters reported on Monday.
India is the world’s second-largest crude steel producer after China. Its steel minister, H. D. Kumaraswamy, described the duty as offering “critical relief” for Indian producers, “especially small and medium-scale enterprises, who have faced immense pressure from rising imports.” The duty is expected to be in effect for 200 days.
India’s Directorate General of Trade Remedies had recommended the imposition of such a tariff in late March, warning of “serious injury and threat” to Indian steel producers. The Chinese state propaganda outlet China Daily argued at the time that protecting steel producers would hurt India’s “automobile, shipbuilding, and construction” industries who would not have access to cheaper Chinese product, citing alleged experts. China Daily also blamed “US protectionism” for India’s consideration of new duties.
Following President Trump’s announcement of global reciprocal tariffs on April 2, the Indian Stainless Steel Development Association (ISSDA) asserted in a statement that the tariffs on India would not have a major direct effect on that industry.
“The greater concern, however, lies in the potential trade diversions triggered by such policies. Countries facing U.S. tariffs may redirect their exports to India, leading to an influx of low-cost imports,” ISSDA President Rajamani Krishnamurti said at the time, according to the Hindu.
The Indian newspaper cited other experts who similarly warned that, “with the exports from the EU to the U.S. becoming unviable, India may face steel dumping from China, South Korea, and Japan.”
“Dumping” is an economic term referring to the practice of a country overproducing a good and then exporting mass amounts of it into a foreign market where domestic producers cannot compete with the lower prices of foreign goods. Through dumping, a major manufacturer such as China can eliminate a domestic industry in a foreign country and replace it with its own companies.
Like India, Vietnam announced anti-dumping steel tariffs in early April, shortly after the Trump tariff announcement. The steel tariffs in Vietnam affected imports from China and South Korea — Chinese manufacturers must pay a 37.13 percent tariff, which South Korean companies will pay 15.67 percent except for Hyundai Steel, which received a discounted rate of 13.7 percent. The Vietnamese Trade Ministry issued a statement justifying the tariffs to “curb the rapid growth of imports which could cause serious harm to the domestic industry.”
The Chinese government went on the offensive against President Trump’s tariff policy immediately after its announcement and has intensified resistance to it as the White House exempted nearly every other American trade partner except for China from the tariff policy. China’s genocidal communist dictator, Xi Jinping, engaged in a whirlwind tour of Southeast Asia last week that began in Vietnam to pressure the region not to negotiate with Trump.
“Trade war and tariff war will produce no winner, and protectionism will lead nowhere,” Xi wrote in an article published by the Vietnamese newspaper Nhan Dan during his visit. “Our two countries should resolutely safeguard the multilateral trading system, stable global industrial and supply chains, and an open and cooperative international environment.”
China’s Commerce Ministry published a statement on Monday warning it would punish countries with unspecified “countermeasures” if they negotiated with Trump.
“Appeasement cannot bring peace, and compromise cannot be respected. To seek so-called exemptions by damaging the interests of others for one’s own temporary selfish interests is to seek the skin of a tiger, which will ultimately only fail on both ends and harm others and oneself,” the statement read. “China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will never accept it and will resolutely take countermeasures in a reciprocal manner.”
India has largely disregarded China’s warnings, granting Vice President Vance a warm welcome on Monday.
Modi personally met Vance and his family on Monday to discuss, among other topics, trade.
“We are committed to mutually beneficial cooperation, including in trade, technology, defence, energy and people-to-people exchanges,” Modi wrote in a message on social media regarding the meeting. “India-US Comprehensive Global Strategic Partnership will be a defining partnership of the 21st Century for a better future of our people and the world.”
Speaking in Jaipur, India, on Tuesday, Vance announced that Washington and New Delhi had agreed on the terms of negotiation for a new trade agreement.
“As many of you are aware, both of our governments are hard at work on a trade agreement based on shared priorities, like creating new jobs, building durable supply chains and achieving prosperity for our workers,” Vance said. “At our meeting yesterday, Prime Minister Modi and I made very good progress on all of those points.”
“We are especially excited to formally announce that America and India have officially finalized the terms of reference for the trade negotiation,” he added. “I think this is a vital step towards realizing President Trump’s and PM Modi’s vision, because it sets a roadmap towards a final deal between our nations. I believe there is much that America and India can accomplish together.”
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