'No legal basis': Amidst India-US trade deal talks, America says India has no grounds for retaliatory tariffs at WTO; here's what the issue is about

The US has told the World Trade Organization (WTO) that India has no ‘legal basis’ to hit out at American tariffs on automobiles, steel and aluminium with retaliatory tariffs. Amidst India-US trade deal talks, the two countries continue to spar over tariffs at the WTO.

The US response follows India's statement that American safeguard measures on steel and aluminium would impact Indian exports worth $7.6 billion to the US, resulting in duty collections of $3.82 billion. Additionally, India has said that these measures would affect automobile product imports valued at $2.89 billion, leading to duty collections amounting to $723.75 million.

The Donald Trump administration has informed the WTO that India lacks legitimate grounds to suggest retaliatory tariffs against American duties on steel, aluminium and automobiles under the guise of safeguard measures, according to an ET report.

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India-US WTO tussle: What’s the problem?

• The issue dates back a few years when the United States implemented protective measures on specific steel and aluminium items on March 8, 2018, by levying 25% and 10% ad valorem duties respectively, which became operational from March 23 that year.
• Subsequently, on February 10, 2025, the US modified these protective measures on steel and aluminium imports, implementing them from March 12.
• Additionally, the United States enforced a 25% ad valorem duty increase on imports of passenger vehicles, light trucks and particular automobile components originating from India.
• The regulation concerning automobile components became effective from May 3 and was done so without a specified end date.
• The United States defended its tariffs, asserting they were essential and protected under national security provisions as a crucial security exemption. The US maintained that India's suggestion to suspend concessions or other obligations regarding these measures lacked any legal foundation, according to the financial daily’s report.

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India-US Trade Deal ‘Nears’
These matters are under discussion at the World Trade Organization whilst both nations simultaneously engage in negotiations for a bilateral trade agreement (BTA). Indian commerce representatives are currently in Washington, participating in the fifth round of India-US BTA discussions.

US President Donald Trump has indicated several times in the last few days that the US is close to finalising a trade with India. Reports suggest that America is offering tariff rates less than 20% to India.

The sticky issues of agriculture and dairy products are likely to be left out of the interim trade deal that is expected to be announced ahead of Trump’s August 1 tariff deadline.

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