US-India Trade Dispute: Tariff Tensions Rise Over Auto Parts

The United States has conveyed to the World Trade Organisation (WTO) that the tariffs imposed on automobiles and auto components are not classified as safeguard measures, rejecting India's appeal for consultations on the issue.

In response to American tariffs on automobiles, India recently sought discussions with the US under the WTO safeguard agreement. The US, however, clarified that these tariffs are not enacted under the emergency action provisions outlined in Article XIX of the 1994 General Agreement on Tariffs and Trade (GATT) and the Agreement on Safeguards.

The US signaled a willingness to engage in dialogue with India, emphasizing that any potential discussions would not fall under the Agreement on Safeguards, and would not compromise their stance that these tariffs should not be labeled as safeguard measures. India resorted to this action after asserting its right to impose retaliatory duties on certain US goods in response to duties on steel and aluminum. As per a communication from India to the WTO, a measure increasing tariffs by 25% on imports of passenger vehicles, light trucks, and specific auto parts from India was adopted on March 26, 2025. The measure, applicable from May 3, 2025, is intended as a safeguard measure according to India.

(With inputs from agencies.)