What is the impact of US tariffs on Indian steel exports to the US in 2025?
Executive summary
U.S. tariffs in 2025 have a limited direct hit on Indian steel exports to the United States because the U.S. buys only a sliver of India’s output and Indian officials point to robust domestic demand as a buffer [1] [2]; yet the tariffs do transmit indirect economic pain—squeezing small foundries, forcing export redirections, and creating price and competitive pressures that Indian policymakers are already countering with duties and diplomatic appeals [3] [4] [5].
1. The narrow direct channel: volumes and official assessments
Indian government officials and several news reports emphasize that shipments to the U.S. are quantitatively small—about 95,000 tonnes versus roughly 145 million tonnes produced domestically—so the immediate, direct impact of a U.S. 25% steel tariff on aggregate Indian steel output is minimal according to the steel secretary and Reuters coverage [1] [6] [2].
2. Contradictory signals from industry and NGOs: concentrated pain for exporters and MSMEs
Despite the small national share, export-dependent clusters and foundries face acute fallout: trade bodies and reporting by DW cite steep declines—an industry estimate of an 85% drop in U.S.-bound steel exports for certain castings and supply chains—and chronic layoffs and shutdowns in regions specialised in U.S. sales [3]. Think tanks and trade analysts warn higher reciprocal tariffs and tariff doubling could erode profitability for specific exporters and narrower product lines that previously relied on U.S. buyers [7] [8].
3. Indirect market effects: redirection, oversupply and domestic price pressure
The tariffs trigger second‑order market shifts: countries priced out of the U.S. market may flood alternative markets, raising import competition into India and worsening margins for local producers, while redirected flows from tariff-hit suppliers could create oversupply that depresses domestic prices by an estimated 6–8% in some scenarios mentioned by industry groups [4] [3] [9]. Several consultancy and industry commentaries stress that even if direct U.S. exposure is small, the global reconfiguration of steel flows can materially affect Indian market dynamics [9] [10].
4. Policy responses and firm strategies: protection, diplomacy and diversification
India’s policy playbook has included provisional safeguard duties (around 12%) to shield domestic producers and formal WTO notices and threats of retaliation, alongside active calls for product‑level exemptions from U.S. negotiators—moves documented in domestic reporting and policy notes [5] [7] [11]. Firms are reported to be seeking tariff exemptions, reworking export strategies, and targeting alternative markets in Europe and Southeast Asia to mitigate U.S. access barriers [9] [11].
5. The elephant in the room: Europe’s carbon rules and the limits of the U.S.‑centric narrative
Multiple officials and analysts say the EU’s carbon border mechanism (CBAM) may pose a larger structural threat than U.S. tariffs because around two‑thirds of India’s exports go to Europe and India’s steel largely relies on high‑emission blast‑furnace routes—an issue that could hit export viability across markets irrespective of U.S. duties [6] [12]. This suggests the U.S. tariff story, while politically salient, is only one of several policy shocks reshaping Indian steel competitiveness.
6. Bottom line: asymmetric and uneven impact
Summing the evidence, U.S. tariffs in 2025 are unlikely to re‑order India’s national steel balance sheet but are seriously disruptive at the margin: small exporters and foundries tied to U.S. buyers face acute income shocks, domestic markets may absorb redirected global supply causing price and margin stress, and policymakers are juggling protective tariffs, trade diplomacy, and export diversification to blunt damage—outcomes reflected across government statements, industry estimates and investigative reporting [1] [3] [5].