US tariff hike on China opens door for Indian steel and aluminum exports 

indica News Bureau-

With US President Joe Biden announcing a steep hike in tariffs on $18 billion worth of Chinese goods, an opportunity has emerged for India to increase its exports of items such as steel, aluminum, and medical goods like facemasks, PPE, syringes, needles, and gloves to the American market, according to industry experts and market analysts.

This opportunity opens up for India against the backdrop of strengthening bilateral economic ties between the two countries.

India and the US had decided to end all bilateral trade disputes pending at the World Trade Organization during Prime Minister Narendra Modi’s state visit to Washington in June 2023.

The US agreed to withdraw the 25 percent and 10 percent import duties levied on certain steel and aluminum products respectively, imposed earlier “on grounds of national security”.

India reciprocated this gesture by withdrawing its retaliatory duties on American products like chickpeas, lentils, almonds, and walnuts.

“The US move to ramp up duties on Chinese goods provides an opportunity for India and other competitors to fill the supply gap. Among the products affected by additional duties on China, India has opportunities in facemasks, PPE, syringes, needles, medical gloves, aluminum, and iron & steel,” Ashwani Kumar, President of the Federation of Indian Export Organisations (FIEO), said.

Once all pending trade disputes were resolved following PM Modi’s talks in Washington, the US agreed to allow the import of 336,000 tons of steel and aluminum from India with the waiver of additional duties imposed under a national security law by the erstwhile Donald Trump administration in 2018.

“Now with a greater opportunity arising following the hike in the tariff on Chinese goods, the exports of Indian steel and aluminum products are expected to accelerate,” said a senior Steel Authority of India (SAIL) official on conditions of anonymity.

However, there are concerns in the steel sector that China, which has excess capacity, may resort to dumping its steel output in other markets, including India.

“China is sitting on overcapacity in many sectors, and thus the threat of dumping cannot be ruled out, especially when an important market is closed for their exports. However, I am confident that industry and the government will keep a close watch on imports, and if a surge or dumping happens, the Directorate General of Trade Remedies (DGTR) will take appropriate action to safeguard the Indian industry,” FIEO chief Ashwani Kumar said.

The Chinese property market has recently experienced a downturn, resulting in an excess of unsold steel. To address this surplus, Chinese steelmakers are exporting the excess metal to other countries at reduced prices. However, this has sparked global concerns. The US and other nations are pushing back against the influx of cheap Chinese steel, arguing that it may distort global steel markets and impact their steel industries.

In response to this economic challenge, China issued a $138.37 billion ultralong bond aimed at supporting its economy during the ongoing property-market slowdown.

Meanwhile, the Biden administration’s new tariffs on strategic sectors aim to protect US manufacturing. However, there is widespread apprehension that these tariffs could accelerate the relocation of Chinese production to other countries like Mexico and Vietnam, allowing Chinese goods to find their way into US markets.

Mexico has already become the top source of imports into the US surpassing China. The Biden administration’s decision to impose tariff barriers on Chinese goods has raised fresh concerns about Mexico becoming a transshipment hub for Chinese products.

The tariff hikes include punitive duties on Chinese electronic vehicles, semiconductors, solar cells, and critical battery minerals. These measures aim to protect new domestic manufacturing sectors through tax incentives and grants.

(With Agencies)

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