Trump’s Steel Tariffs Intensify India’s Case for Safeguard Duties

An announcement on the safeguard duty, which has been anticipated by the Indian steel industry, was widely expected in the first two weeks of February 2025. But with no update yet, the industry’s worries are mounting particularly following the U.S. imposing stiff tariffs on imports of steel.

U.S. President Donald Trump announced a 25% tariff on all steel imports on February 10, with no exceptions. India’s direct exposure to the U.S. market is less, but this will lead to an export diversion from major steelmaking countries such as Japan and South Korea to India,” Shubham Majumdar, an analyst at the brokerage IIFL Securities, wrote in a note. “Such scenarios could further pressurize Indian steelmakers’ imports, which makes the enforcement of safeguard duties all the more imperative.

Rising Import Pressures:

Since the last fiscal year, India’s steel industry has been struggling against a wave of cheaper imports, primarily from China and Vietnam. Collectively, these two countries have constituted almost 35 percent of India’s overall finished steel imports in FY25. And with the U.S. market now less open to Japan and South Korea, those two countries might also find alternative buyers, dumping even more into the Indian market.

The bilateral FTAs with Japan and South Korea may aggravate the situation, as Indian buyers may gain access to an import at a term lower to the market. This could have a downward impact on the domestic steel prices, hurting the profitability of the industry in FY26, ICRA said.

What Are the Duties of Safeguard?

In September 2024, the Indian government initiated an anti-dumping probe against steel imports from China and Vietnam amid talks of imposing a safeguard duty of as much as 25% Earlier, JSW Steel’s CEO Jayant Acharya had said the decision is expected by mid-February. But industry heads, including Tata Steel’s MD & CEO TV Narendran, are awaiting specifics of the final order.

Steelmakers are calling for a 25% duty analysts expect it to be lower, between 10-15%.

How Will Safeguarding Duties Help?

The Indian steel stocks will be positively impacted even by a 5% duty, the global investment bank said. Such safeguard duty could aid in stabilizing domestic steel prices, which would aid the margins of companies and enhance capex going forward. According to Nuvama Research, the imposition of duties could aid the Indian steelmakers raise prices by ₹2,000-2,500 per tonne.

The companies that will benefit most are those with a greater proportion of flat steel products. Morgan Stanley and two other bases that domestic hot-rolled coil prices could rise 10% on 15% duty implementation and FY26 EBITDA estimates of steel giants; JSW Steel, Tata Steel, SAIL and Jindal Steel & Power may increase 15-40%. JSW Steel is likely to be the biggest beneficiary among them owing to its extensive flat steel manufacturing capacity.

In this context, a decision on a safeguard duty remains crucial with changes in global trade impacting the steel sector in India and ensuring a level playing field for domestic players.