India Informs WTO of Possible Retaliatory Tariffs on U.S. Goods

The action comes after the United States opted to prolong safeguard tariffs—resulting in a 25% ad valorem rise—on imported passenger cars, light trucks, and specific auto parts from India.

The suggested halt of concessions by India or other commitments would manifest as a rise in tariffs on certain goods coming from the US.

History of U.S. Tariffs

Initially implemented in 2018 during President Trump's administration, these tariffs focused on steel (25%) and aluminum (10%) citing national security reasons.

In 2025, under Trump's second term, the U.S. removed country- and product-specific exemptions, directly impacting India.

The U.S. refused to engage in discussions, stating that the tariffs were measures for national security rather than safeguards.

WTO Safeguards Understanding

Article 12.3 of the WTO Safeguards Agreement mandates that a nation intending to implement safeguard measures must consult with affected members beforehand, allowing them the chance to discuss the proposed measures and ask for clarification.

Article 12.5 of the WTO Agreement on Safeguards permits a member nation to announce its plan to halt trade concessions if another member enacts safeguard measures without adequate consultation.

India's Stance

India asserts that the actions implemented by the United States do not align with the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the Agreement on Safeguards (AoS).

Additionally, it stated that because the U.S. did not engage in required consultations as per Article 12.3 of the AoS, India was entitled to respond.

India maintains the right to halt concessions or other responsibilities that are essentially equal to the negative impacts of the measure on India's trade.

India will notify the WTO’s Council for Trade in Goods and Committee on Safeguards regarding its measures.

Consequences

Bilateral Trade: The trade estimated to be impacted by the US action is worth $2.9 billion, with India aiming to recover $723.75 million yearly through its suggested tariff actions.

Trade Agreement: India's notification timing is noteworthy, as it arrives during increased anticipation for a breakthrough in the current India-US Bilateral Trade Agreement (BTA) discussions.

The action might be viewed as an effort by India to gain negotiating power, particularly as it advocates for the elimination of US safeguard tariffs within the final agreement details.

WTO Regulations and Reform: The contention regarding whether national security tariffs are considered safeguard measures contributes to wider discussions on WTO's significance and ability to enforce rules.

Final Thoughts

The proposal holds importance as both nations are in discussions for a bilateral trade agreement (BTA).

Trade experts indicate that India's WTO notification represents a legal and tactical move, indicating its preparedness to respond to US safeguard tariffs on vehicles and components.