05-Jul-2025 11:00 AM
India has officially informed the World Trade Organization (WTO) that it may impose retaliatory tariffs worth $724 million on imports from the United States. This announcement follows the U.S.’s decision to hike tariffs on specific automobile goods imported from India, including passenger vehicles, light trucks, and auto parts.
The move reflects growing trade tensions at a time when India and the U.S. are negotiating a mini-trade deal, which is currently in the advanced stages. These talks are being spearheaded by Rajesh Agarwal, the Special Secretary in the Ministry of Commerce and Industry.
The U.S., on March 26, imposed a 25% tariff increase on select Indian auto exports without notifying the WTO. According to India, such an action violates the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards (AoS).
India contends that these U.S. actions amount to safeguard measures—tools typically used by countries to protect domestic industries from unexpected surges in imports. However, the U.S. did not consult India before implementing these tariff hikes, which goes against WTO procedures.
India’s official communication to the WTO (dated July 3) emphasized that:
The U.S. failed to notify its safeguard measures to the WTO.
No prior consultations were held with India.
Therefore, India has the right under Article 8 of AoS to suspend equivalent concessions—meaning, to impose counter-tariffs matching the adverse trade effects.
India clarified that these new tariffs would target selected U.S. imports, mirroring the financial impact India faces due to the U.S.’s earlier tariff decision.
Interestingly, this isn’t the first instance of India notifying WTO about possible retaliation against the U.S. In previous years too, India has invoked WTO mechanisms when it faced trade disadvantages due to abrupt U.S. actions—such as steel and aluminum tariffs.
This incident highlights key themes of global trade diplomacy, India’s stance on multilateral agreements, and how WTO acts as a forum for resolving trade disputes. Understanding such cases is crucial for GS Paper II (International Relations) and GS Paper III (Indian Economy).
1. Which of the following agreements was cited by India in the WTO dispute with the U.S.?
A. TRIPS Agreement
B. General Agreement on Tariffs and Trade (GATT) 1994
C. Paris Agreement
D. Trade Facilitation Agreement
✅ Answer: B
2. What was the value of retaliatory tariffs India proposed to impose on U.S. imports?
A. $500 million
B. $1 billion
C. $724 million
D. $900 million
✅ Answer: C
3. What prompted India to consider retaliatory tariffs against the U.S.?
A. Visa restrictions
B. Steel and aluminum tariffs
C. Increased tariffs on automobiles and auto parts
D. Ban on Indian pharma products
✅ Answer: C
4. Which article of the Agreement on Safeguards allows India to suspend concessions?
A. Article 5
B. Article 12.3
C. Article 8
D. Article 11
✅ Answer: C
