Washington Pushes Back on India’s WTO Claim on Auto Tariffs, Cites National Security Grounds

New Delhi, Jul 18 – The United States has rejected India’s claim at the WTO that its tariffs on automobiles and auto parts qualify under safeguard measures. The US argued the duties were imposed for national security reasons instead and fall outside the scope of WTO safeguard measures.

India maintained that the tariffs harm its domestic industry and signalled plans for retaliatory duties, asserting its rights under WTO safeguard measures. As the dispute also exists in other sectors, India has hinted at mirroring its 2019 response targeting a broad range of U.S. products.

What Are WTO Safeguard Rules and Retaliatory Duties?

Under WTO rules, if a country suddenly raises tariffs to protect its domestic industry, known as a safeguard measure, other countries can respond with equal trade restrictions. Such restrictions, called retaliation, let the countries recover trade losses caused by the original tariffs.

India Plans Retaliatory Duties, Cites Harm to Domestic Industry

India had earlier stated it was reserving the right to impose retaliatory tariffs on US imports in response to the 25% duties on auto and auto parts. According to India, the tariffs harm its domestic industry and therefore fall under WTO safeguard measures, giving India the right to suspend equivalent concessions under WTO rules.

US Response: Tariffs Are Not Safeguards

In a WTO communication dated July 17 and circulated at the request of the US delegation, Washington said, “These actions are not safeguard measures. Accordingly, there is no basis for India’s proposal to suspend concessions or other obligations under the Agreement on Safeguards.”

The US added that the duties were implemented under Section 232 of the Trade Expansion Act to adjust imports that could threaten national security.

Steel, Aluminium Tariffs Also Disputed

The US also pushed back against India’s similar claims regarding American tariffs on steel and aluminium. India had recently revised its proposal to impose retaliatory duties in light of the US doubling these tariffs from 25% to 50%.

Possible Indian Tariff Response

While India has not disclosed the specific list of products that could face retaliatory duties, officials have indicated that the move could mirror its 2019 response. That year, India imposed higher tariffs on 28 US products, including almonds, apples, and chemicals.

WTO Dispute Won’t Affect Trade Talks, Says Official

An Indian official clarified that India’s reservation of rights under WTO rules is a procedural step and does not impact the ongoing negotiations for a bilateral trade agreement with the US. Currently, an Indian delegation is in Washington for the fifth round of talks on the proposed trade deal.

Outlook

India’s push for retaliatory tariffs on U.S. auto duties could escalate trade tensions, raising risks for sectors reliant on bilateral flows. While procedural for now, any tariff action may disrupt select U.S. exports and add friction to ongoing trade negotiations.

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