India-US trade deal: Steep tariffs to stay for steel, copper and aluminium

India-US Trade Deal Ushers in Tariff Cuts with Key Exceptions

US President Donald Trump and Indian Prime Minister Narendra Modi have announced a significant trade agreement that lowers reciprocal tariffs on Indian goods entering the US from 25% to 18%. This move, revealed through social media posts by both leaders, marks a step forward in bilateral economic relations amid ongoing global trade tensions. PM Modi expressed delight over the reduced tariff for "Made in India" products, signaling optimism for enhanced market access. However, the deal comes with caveats that have prompted caution from analysts, particularly regarding persistent high duties on critical sectors.

The agreement stems from negotiations aimed at addressing trade imbalances, with Trump highlighting India's commitment to reduce its own tariffs and non-tariff barriers on American products to zero. He also mentioned a pledge from India to ramp up purchases of US energy, technology, agriculture, and other goods, eyeing a substantial $500 billion figure over time. Yet, experts urge restraint in celebrations, noting the absence of a formal joint statement or detailed negotiated text to clarify enforceability. This political signal could evolve into a fuller pact, but uncertainties linger.

Steep Tariffs Persist on Steel, Copper, and Aluminium

Despite the overall tariff reduction, Section 232 national security tariffs remain firmly in place at 50% for steel, aluminium, copper, and related products, along with 25% on select auto components and furniture. These measures, justified on security grounds rather than emergency powers, were hiked earlier in 2025—steel and aluminium from 25% to 50% in June, and copper added at 50% in July. Indian exporters face continued challenges, with over $8.3 billion in 2024 shipments to the US still exposed, representing about 10% of total exports to the market.

Automobiles lead the vulnerability at $3.9 billion, followed by steel at $2.5 billion and aluminium at $800 million, accounting for over 85% of at-risk goods. India relies heavily on the US for these exports—39% of its global timber, 37% of aluminium, and 34% of steel—making even partial barriers impactful on margins and competitiveness. The US has carved similar exceptions in deals with the EU (15% general, but metals unchanged), UK (10%), and others, showing a pattern of protecting strategic industries.

Mixed Reactions and Implications for Indian Industry

Think tank Global Trade Research Initiative (GTRI) advises caution over celebration, questioning the tariff cut's scope and whether it truly drops from 50% or just 25%. Founder Ajay Srivastava points out that India's annual US imports are under $50 billion, casting doubt on the $500 billion purchase claim as a long-term goal rather than immediate commitment. Srivastava emphasized.

Trade deals are serious business. Until there is a joint statement, negotiated text, and clarity on enforceability, this should be treated as a political signal—not a concluded trade deal. Caution, not celebration, is warranted,

On the positive side, zero-duty access persists for pharmaceuticals, aircraft parts, and some electronics, benefiting key Indian strengths. Union Minister Piyush Goyal noted strong negotiations with his US counterpart, aiming for swift closure. Markets reacted positively, with GIFT Nifty surging nearly 600 points on the news. For businesses, the deal could boost non-sensitive exports while pressuring metal producers to diversify markets or absorb costs. Chinese steel diversions might further squeeze Indian players, prompting domestic safeguards like the 12% duty introduced in April 2025.

Longer-term, the pact strengthens India-US ties, especially with External Affairs Minister Jaishankar's upcoming US visit on critical minerals. It aligns with Trump's broader tariff strategy, offering reciprocal relief but safeguarding US priorities. Indian firms in autos and metals must navigate these hurdles, potentially spurring investments in value-added products or alternative destinations. Overall, while the 18% rate eases some burdens, the unchanged steep tariffs on steel, copper, and aluminium underscore the deal's limited immediate relief for vulnerable sectors.

In summary, the India-US trade deal reduces general tariffs to 18% but leaves 50% Section 232 duties intact on key metals, exposing $8 billion in Indian exports to ongoing pressures. Optimism tempers with calls for formal details, balancing opportunities in other areas against sector-specific challenges.