In a significant escalation of trade tensions, India has formally notified the World Trade Organisation (WTO) of its intention to impose retaliatory tariffs on select U.S. goods, in response to what it deems unlawful safeguard duties imposed by Washington on Indian automobile parts.
The move comes after the United States implemented a 25% ad valorem tariff on imports of passenger vehicles, light trucks, and certain auto parts from India — measures that took effect from May 3, 2025, and were introduced for an indefinite duration.
India Pushes Back Under WTO Rules
In its official communication to the WTO Council for Trade in Goods, India stated it is preparing to suspend trade concessions and increase tariffs on specific American products, in a tit-for-tat move consistent with WTO’s Safeguards Agreement. These countermeasures are aimed at offsetting the economic injury caused by the U.S. actions.
“India reserves the right to suspend concessions or other obligations… The proposed suspension would result in an equivalent amount of duty collected from products originating in the United States,” the notification read.
India claims that the U.S. duties violate the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on Safeguards, particularly because Washington failed to notify the WTO of the measures and skipped prior consultations with Indian authorities.
The Economic Impact
According to India’s submission, the U.S. safeguard measures affect $2.89 billion worth of annual Indian auto parts exports, with an estimated duty burden of $723.75 million. In response, India is proposing to impose equivalent tariffs on U.S. imports to mirror the economic loss.
Furthermore, India has reserved the right to adjust the list of targeted products and tariff rates, providing itself flexibility to adapt as negotiations or trade dynamics evolve.
Strategic Move or Tactical Pressure?
The development is being closely watched as India and the U.S. are currently negotiating an interim trade agreement, aimed at enhancing bilateral trade ties. The WTO notification, therefore, may be as much about leveraging negotiations as it is about protecting trade interests.
Trade policy experts believe this is a calculated legal move rather than an impulsive reaction.
“India’s WTO notification is a strategic signal, asserting its rights under international trade law. The proposed retaliation, worth over $700 million, is proportionate to the damage caused,” said Ajay Srivastava, founder of Global Trade Research Initiative (GTRI).
He added, however, that India may not follow through immediately, citing a similar case involving U.S. steel tariffs where India held back on its right to retaliate.
“Given the ongoing India-U.S. trade talks and broader geopolitical factors, this might be more of a warning shot than a full-blown trade retaliation,” Srivastava explained.
Recent Pattern of Trade Defense
Notably, this is not the first time India has taken a tough stand against U.S. tariffs. Just last month, India raised similar concerns at the WTO over steel and aluminium duties imposed by the U.S.
These recurring disputes reflect growing trade friction between two strategic partners, even as they continue to expand defense and diplomatic cooperation on other fronts.
What Lies Ahead?
While India’s WTO notification asserts its legal rights, actual implementation of retaliatory tariffs is still uncertain. The Indian government appears to be using the WTO platform to:
- Put pressure on the U.S. to engage in meaningful trade negotiations
- Signal that unilateral protectionist measures will not go unchallenged
- Maintain leverage in ongoing bilateral trade talks
In the coming weeks, trade diplomats from both nations are expected to engage in further dialogue. Whether this results in a breakthrough agreement — or a further escalation — will depend on how both sides navigate the delicate balance of strategic interests and economic fairness.
