According to the latest reports, steel imports from India to U.S. are likely to get an exemption from the steep tariffs of 25% announced in the month of March 2018.
However, a twist here is that U.S. has agreed to exempt a certain percentage of India’s average exports in last five years from the high import duty, whereas India is trying to win complete exemptions from the high tariffs. The details of the quantity that U.S. allowed to exempt from tariffs is still awaited.
Thus, as the talks between the two countries are still going on, India has delayed the implementation of higher tariffs on some goods imported from the United States till Nov 2. In June, India decided to impose retaliatory tariffs from August 4. But it was extended by another 45 days till September 18.
The other countries that have earned exemption from U.S. steel and aluminum tariffs are South Korea, Brazil and Argentina. On 30 Aug, U.S. has signed a proclamation that will allow U.S. companies to request product-specific exclusions for steel imports from the above three countries, along with aluminum imports from Argentina, even after import quotas from those countries are filled.
The indirect impact of U.S. tariffs on India
India is not a major destination for U.S. steel imports as the share of India in U.S. total steel imports account for less than 2%. In 2017, India exported about 718,000 tonnes of steel to U.S. out of its total steel imports of 34.6 MnT.
Because such a small quantity is being exported from India to U.S. the direct impact of these tariffs on Indian steel sector is limited. However, the indirect impact of these tariffs is that the countries which are exporting to the U.S. are forced to look at other major steel consuming markets like India to sell their surplus (produce) and are slightly distorting the Indian domestic steel market considerably due to dumping.
According to customs data, in the first quarter of FY19 starting from Apr-Jun’18, India became a net importer of steel, with foreign supplies reaching 2.10 MnT, 15% higher than a year earlier. While the steel imports from South Korea rose 31% from a year earlier, those from Japan climbed 30% y-o-y basis.
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