India-U.S. trade: Small exporters seek import duty cuts to counter U.S. steel, aluminium tariffs

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India’s small engineering goods exporters have urged the government to cut import tariffs on some U.S. goods to try and achieve more favourable trade terms as President Donald Trump prepares to implement new steel and aluminium duties, the head of an industry body said. The 25% U.S. tariffs on steel and aluminium imports, effective March 12, have raised Indian exporters’ concerns about declining orders and rising costs.

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“Of India’s $20 billion annual engineering goods exports, nearly $7.5 billion worth of shipments could be affected,” said Pankaj Chadha, chairman of the Engineering Export Promotion Council, which represents more than 10,000 small exporters.

The EEPC and other industry chambers have urged the government to cut tariffs on select U.S. goods with low inbound shipments, Mr. Chadha told Reuters on Wednesday.

They expect that lowering such tariffs could prompt the Trump administration to offer favourable terms and move forward with a proposed bilateral trade deal. Trump has labelled India a high-tariff country and warned of “reciprocal tariffs” from early April.

Commerce minister Piyush Goyal is in the U.S. for trade talks, aiming to negotiate potential tariff cuts as part of the proposed trade deal and to assess the impact of Mr. Trump’s planned reciprocal tariffs.

India could, for instance, cut import duty on U.S. steel scrap from 7.5% to nearly zero, and reduce tariffs on nuts, castings and forgings while offering concessions on selected agricultural and manufacturing items, Mr. Chadha said.

Exporters also fear that India’s planned safeguard duty of up to 14% on steel imports, aimed at protecting local steel manufacturers from cheaper Chinese imports, will drive up domestic prices and squeeze their margins.

India’s exports of engineering goods to the U.S. jumped 18% year-on-year in January to $1.62 billion, outpacing the sector’s overall growth of 7.44% ahead of the tariffs, EEPC data showed.

From April 2024 to January 2025, the first 10 months of the fiscal year, engineering exports to the U.S. rose by an annual 9% to $15.6 billion, driven by an increase in shipments of aircraft parts, electrical machinery, automobiles, industrial machinery and medical instruments.

“The engineering industry faces major challenges, and the latest U.S. tariffs add pressure. Continued government support in export credit and technology is crucial for competitiveness,” Mr. Chadha said.

India’s global engineering exports, which account for a quarter of total merchandise exports, rose to $9.42 billion in January from $8.77 billion a year earlier, though were lower than December’s $10.84 billion. Cumulative exports for April-January rose 9.82% year-on-year to $96.75 billion, EEPC data showed.