India Proposes Retaliatory Duties Against US Auto Tariffs at WTO

India has threatened to impose retaliatory tariffs against the United States at the world trading organization (WTO), regarding the US safeguards, which imposes duty on Indian automobile parts and cars at a 25 % increment. This action comes after India had failed in her efforts to talk to the US regarding the tariffs. The suspension of concessions proposed is to ensure that the Indian exports which may be affected due to these new tariffs will be balanced economically.

Context

• India has reported to the WTO that it is willing to retaliate against the US due to the 25 % import tariff on Indian auto parts and vehicles. 
• This is in response to the safeguards taken by the US and failure by India to negotiate on fair competition of trade practices in the market.

Key Details:

The US Tariff Measures:

• In March 2025, the US added a tariff penalty of 25 % on imports of passenger and light trucks and parts of some automobiles that emanated in India.
• These are safeguard tariffs that will come into effect in May 2025 and have not yet been notified to the WTO by the US.

India’s Response:

• India has suggested that concessions or WTO compliances should be suspended through higher tariffs on some of the US products.
• The compensatory obligations would amount to the same as the US tariffs, whereby India was to obtain the same sum of USD 723.75 million on US exports.

Effect on bilateral Trade:

• Imports to the US by India add up to USD 2.9 billion per year, which are affected by the US safeguard regulations.
• India claims that tariffs imposed by the US do not allow the WTO agreements, especially the General Agreement on Tariffs and Trade (GATT) 1994.

Indian Strategic move:

• The action of India can be regarded as both a legal and a strategic move in the context of international trade practices.
• Through the Safeguard Agreement of WTO, India is countering the retaliatory measure of the US by claiming it the right to retaliate in proportion against the US its preliminary rights to protective trade measures.

Implementation in doubt:

• Although the retaliatory proposal displays the interest of India to take any action, it is not clear whether or not it will go through, since nobody pursued a similar retaliatory act against US steel tariffs in the past.

Conclusion

The fact that India has made a proposal to offer retaliatory tariffs against the goods brought by the US to India should be noted as a major step as the two countries are still engaged with the trade negotiations that actually indicate a success. Although this action is necessary and shows the desire by India to safeguard its trade interests that are based on international law, the real practical use of these tariffs might largely hinge on the overall geopolitical situation and the course of the bilateral trade negotiations.