Why India-US 'mini-trade deal' might not happen after all
09 Jun 2025

The US's reluctance to exempt India from 50% tariffs it has slapped on steel and aluminium imports, has emerged as a hurdle in finalizing a "mini-trade deal" between the two countries by July 8.

India and America want to close a trimmed version of the first tranche of a Bilateral Trade Agreement (BTA).

The move comes ahead of US President Donald Trump's country-specific reciprocal tariffs, including a 16% levy on New Delhi, which will be effective from July 9.

No signs of duty exemption
Tariff escalation

The US's decision to raise the steel and aluminum duty to 50% could delay the finalization of this deal.

This is especially true since there are no signs yet that they would be willing to exempt it entirely.

Another concern is the 10% baseline tariff, which remains in place for all imports despite country-specific tariffs being on hold until July 8.

India's exemption from higher tariffs is crucial
Export concerns

India's exemption from higher tariffs on steel and aluminum imports is crucial as the country exported $4.56 billion worth of iron, steel, and aluminum products to America in FY23.

Despite hoping for a trade deal that would eliminate this 50% levy, India has taken one of its largest trading partners to the WTO, over retaliatory duties against America's steel and aluminum tariffs.

US rejects India's WTO notice
Trade tensions

The US has rejected India's WTO notice and doubled these tariffs to 50% for all nations from June 4.

This move puts over $3 billion worth of steel-related exports at risk due to higher American duties on imports.

The legality of reciprocal tariffs is also being questioned in the US.

UK exempted from steel, aluminum tariffs
Success

The US has temporarily exempted UK from steel and aluminum sectoral tariffs after signing the Economic Prosperity Deal (EPD) on May 8.

However, Trump's unilateral decision to raise these taxes could prolong negotiations with other countries like India.

Local industry bodies have been urging the Centre to secure an exemption from higher levies on steel and aluminum imports.