India proposes tit-for-tat retaliatory strike against $725 million US auto tariffs at WTO
NEW DELHI: Ahead of a bilateral trade deal with the United States, India on Friday proposed to the World Trade Organization (WTO) to impose retaliatory tariffs on US automobile parts imports.
The notification follows US tariffs on Indian automobile parts, which India argues are inconsistent with WTO agreements and are harming its trade interests. The US, on March 26, 2025, imposed a 25% tariff on imports of passenger vehicles, light trucks, and certain automobile parts originating in India. These measures were set to take effect on May 3, 2025, and will continue indefinitely, potentially creating long-term disruptions for Indian exporters.
“The proposed suspension of concessions or other obligations would take the form of an increase in tariffs on selected products originating in the United States. Without prejudice to the effective exercise of its right to suspend substantially equivalent obligations referred to in Article 8.2, AoS, India reserves its right to suspend concessions or other obligations after the expiration of thirty days from the date of this notification,” said India in a notification to WTO.
The proposed suspension, which involves tariff increases on selected US products, is set to come into effect 30 days after the notification is issued. In its official notification, India outlined that the suspension will specifically target US exports worth approximately $2.895 billion annually to India. The suspension of concessions is expected to result in $723.75 million in additional duties on US products.
India also highlighted that, despite the significant impact of the US tariffs on Indian trade, the US has not formally notified these measures to the WTO, which is required under WTO rules for transparency and accountability.
India maintains that these US actions are not in line with the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards (AoS). This is not India’s first WTO-sanctioned retaliation.
Last month, India submitted a similar notification to the WTO in response to tariffs imposed by the US on steel, aluminum, and their derivative products. In 2019, India also raised tariffs on 28 US products following the removal of its Generalized System of Preferences (GSP) status and the continued metal tariffs. Those duties were rolled back in 2023 as part of a bilateral truce. Currently, all eyes are on the announcement of an interim trade deal between both nations, as the 90-day pause on the U.S.’s plan to impose country-specific reciprocal tariffs ends on July 9.
“India’s WTO notification is a legal and strategic step, signaling its readiness to retaliate against the US safeguard duties on automobiles and parts. By invoking Article 8.2 of the Safeguards Agreement, India is asserting its rights under international trade rules. The proposed retaliation—tariff hikes on U.S. goods worth over $700 million—is proportionate to the injury caused. However, whether India will follow through remains uncertain,” said Ajay Srivastava, founder GTRI.
