Context: The US under the Trump Administration has increased tariffs on Aluminium imports from 10% to 25% (effective March 12, 2025).
Relevance of the Topic: Prelims: Key trends in India-US trade relations; Protectionist policies.
Overview of India’s Aluminium Exports to the US:
- India is the world's second largest aluminium producer after China.
- The US has become India’s largest market for aluminium exports, particularly for aluminium conductors used in power transmission.
- Key Indian Aluminium Products Exported to the US:
- Aluminium Conductors used in high- and medium-voltage cables for power transmission- 38% of US imports (by weight) in 2024, valued at $130 million.
- Unwrought aluminium – $185 million
- Nails and fasteners – $107 million
- Aluminium wire – $98 million
- Aluminium tube and pipe fittings – $16 million (26% of US imports in this category)
- India’s aluminium exports to the US have grown significantly :
- 2016-17: $350 million
- 2022-23 & 2021-22: Over $1 billion each year
- 2023-24: $946 million
- Despite this growth, India accounts for only 3% of total US aluminium imports.
US Tariff Policies : Then and Now
- 2018 Tariffs (Trump’s First Term):
- Imposed 25% tariffs on steel and 10% on aluminium.
- Some countries (E.g., Canada, Japan, EU, Mexico) were exempted, but India was not.
- Despite tariffs, India’s aluminium conductor exports to the US increased.
- 2024 Tariffs (Trump’s Second Term):
- New tariffs of 25% on aluminium imports, effective March 12, 2025.
- Broader coverage – includes semi-finished and finished aluminium products.
- Justification: Prevent tariff evasion and strengthen the US aluminium industry.
Impact on India’s Aluminium Industry:
- India exports 40% of its aluminium production, with 6-8% of total exports going to the US. Tariffs may reduce export volumes and revenues for Indian aluminium manufacturers.
- Downstream aluminium industry (E.g., machinery components, fasteners, wires) will also face challenges.
Comparison with the Steel Industry
- India’s steel exports to the US are lower (4% of total exports in 2024). Direct impact on steel sales is limited, but there could be an indirect effect due to China’s excess steel entering India.
- The new US tariffs also extend to steel products, affecting multiple sectors.
The new 25% tariffs will impact export revenues, but aluminium exports form a small share of overall business for most Indian companies. Diversification of export markets and domestic demand growth could help offset losses from the US market.