India is preparing for a potential increase in steel imports following the imposition of a 25% tariff on steel by U.S. President Donald Trump. The tariff, which came into effect on Wednesday, is expected to cause a significant shift in global steel trade dynamics. As Japan, South Korea, and China account for approximately 80% of India's steel imports, there is growing concern that these countries might redirect their exports to India in response to the new U.S. tariff.
The tariff imposed by the United States is anticipated to impact India's steel market significantly. S&P Global Ratings highlighted this potential outcome in a note released last week, emphasizing the likelihood of increased imports from Japan and South Korea. These countries, facing reduced access to the U.S. market, may seek alternative destinations for their steel exports, with India being a major target due to its substantial market size.
India's steel prices have already been affected by an influx of finished steel, predominantly from China. With China being one of the key exporters to India, the U.S. tariff could exacerbate this trend by driving more Chinese steel into the Indian market. The resulting surplus could further suppress domestic steel prices, posing challenges for local producers.
Japan and South Korea are also significant contributors to India's steel imports. The redirection of their exports towards India could lead to increased competition and pricing pressures within the Indian market. As these countries adjust their trade strategies in response to the U.S. tariffs, India must navigate the potential consequences for its domestic steel industry.