India's Strategic Play: Leveraging FTAs Amidst US Tariff Tensions

As India faces challenges from the United States over tariffs on steel and aluminium, the Global Trade Research Initiative (GTRI) recommends a strategic, pragmatic approach. The think tank suggests leveraging the ongoing bilateral Free Trade Agreement (FTA) discussions as a means of negotiation with the US. This strategy could see India pushing for the reduction or removal of Section 232 tariffs as part of the FTA discussions.

According to GTRI, this method allows India to utilize its negotiating power to attain significant market access without escalating the dispute into legal battles or trade wars. This is especially pertinent given the deep engagement between India and the US in FTA talks at present.

Recently, President Trump announced a hefty 50% duty on steel and aluminium imports effective June 4, 2025. This follows the previous US rejection of India's appeal at the World Trade Organisation (WTO), as the US holds that its tariffs are for national security, thus not covered by WTO's Safeguards Agreement. India's counter-options could include retaliatory tariffs, similar to actions by the EU, Canada, and China, or challenging the national security exception at the WTO, each fraught with risks and uncertainties.

(With inputs from agencies.)