Before the implications of one set of Donald Trump’s edicts get digested, new ones come in. The latest in the breathless pace of the US president’s executive orders is a 25 percent import tax ‘without exemption, without exception’ on all steel and aluminium entering his country. Though the new trade barrier will hit Canada the hardest—as it’s the US’s largest supplier of metals—India, a steel and aluminium exporter, will feel the heat too. The immediate fallout will be on American consumers who will find the cost of every product using steel and aluminium going up. But Trump is staying the course with his America First policy with the declaration: “Ultimately, it will be cheaper… Our nation requires steel and aluminium to be made in America, not in foreign lands.”
Shares of US steel companies hit the roof, but there was carnage everywhere else. India’s stock markets have fallen over the last two days on fears that retaliatory tariffs by India and others will invite new and higher US tariffs. India has never been a big steel exporter to the US. However, what may impact India substantially is the dumping of steel by foreign manufacturers. In the last calendar year, China exported $13.2 billion worth of steel in different forms to the US. Much of this may now find its way to India, creating a glut and disrupting prices here. On aluminium, the hit will be more direct. India is one of the largest producers of the alloy with a 6 percent global share, and exported almost $1 billion worth of it to the US last year. This might now become a trickle.
These tariffs could not have come at a worse time. India’s exports have shrunk 29 percent to 3.99 million tonnes during the April-January period this financial year. In an increasingly protectionist world, India will have to find new export markets and products, while simultaneously indigenising domestic product lines. On a happier note, Trump’s first innings showed that his bark is worse than his bite; much of his swagger is designed to drive better trade deals for the US. Hopefully, Prime Minister Narendra Modi will bargain hard on these and other issues during his visit to the White House and convince the US president that a deal involves a give as well as a take.