US president Donald Trump announced last week that the US would impose heavy tariffs on imported steel and aluminum, but indicated that some countries such as Canada, Mexico and Australia would be exempted. Key US trading partners, including the EU, have warned the tariffs could backfire, provoking a trade war and hurting allies more than China, the main target of US tariffs.
India ranks 10th among countries exporting steel to the US, with volumes rising 16% between 2011 and 2017 on an annualized basis. US accounts for just 2% of India’s total steel exports and 6% of total aluminum exports.
Although the short-to-medium term impact on the Indian steel industry will be minimum, the country could witness dumping by US-hit exporters such Korea and Russia as they hunt for other markets.
Secondly, the potential diversion of almost 6.4 million tonnes of steel and 3.7 million tonnes of aluminum to the global market will drive down prices, affecting domestic realization of homegrown producers.