Modi’s WTO Challenge against Trump-Era Tariffs

Heramba Nath

(herambanath2222@gmail.com)

In a decisive and assertive move to protect India’s economic interests and uphold the princi- ples of fair trade, Prime Minister Narendra Modi’s government has formally challenged the United States at the World Trade Organization over the continuation of additional tariffs on Indian steel and aluminium exports. These tariffs, originally imposed during Donald Trump’s presidency under the guise of national security concerns, have remained in place despite repeated diplomatic engagements and efforts for resolution. India’s decision to revive the dispute at the WTO marks a significant step in New Delhi’s strategy to assert its sovereign trade rights on the global stage and push back against unilateral and protectionist measures by advanced economies.

The genesis of this dispute traces back to 2018, when Donald Trump, citing Section 232 of the United States Trade Expansion Act, unilaterally slapped additional duties of 25 per percent on steel and 10 per percent on aluminium imports from several countries, including India. The rationale provided was to safeguard America’s national security interests. However, India, along with several other affected countries, rejected this justification as an abuse of trade law provisions and inconsistent with the rules of the WTO. New Delhi argued that such measures undermined the multilateral trading system and posed a serious threat to global economic stability by encouraging protectionism over cooperation.

For India, these tariffs have had direct economic consequences. The Indian steel and aluminium industries, which collectively account for billions of dollars in annual exports and support hundreds of thousands of jobs, have faced reduced competitiveness in the American market. The additional duties not only curtailed India’s export growth but also indirectly affected ancillary sectors such as mining, logistics, and transportation. Despite repeated appeals and negotiations, the tariffs remained unchanged, compelling the Modi government to take formal legal recourse through the WTO’s dispute settlement mechanism in May 2025.

The timing of India’s decision is especially strategic. With Commerce and Industry Minister Piyush Goyal scheduled to visit Washington for high-level trade talks, New Delhi’s move to file a formal complaint at the WTO days ahead of these discussions serves as a clear message that India is prepared to defend its economic rights firmly. It also places added diplomatic pressure on the United States to consider a resolution through negotiation rather than prolonging a dispute that has already strained bilateral economic relations.

Domestically, this decision has stirred political debate. While industry bodies such as the Federation of Indian Export Organisations and the Confederation of Indian Industry have welcomed the move, terming it necessary and long overdue, the political opposition has raised questions about the government’s delayed action. Congress party spokespersons remarked that the Modi government’s earlier reluctance to challenge Trump’s administration head-on was driven more by personal diplomacy than by strategic national interest. Opposition leaders now cautiously applaud the WTO challenge but stress that swifter action could have mitigated the adverse impact on India’s export sector much earlier.

At a geopolitical level, India’s challenge at the WTO also reflects larger shifts in the global economic order. In recent years, the multilateral trading system has faced unprecedented stress, particularly with the paralysis of the WTO’s Appellate Body due to systematic appointment blocks by the United States. New Delhi’s action draws attention to this dysfunction and underscores the need for restoring the credibility and effectiveness of the world trade dispute resolution framework. It also sends a strong signal to other emerging economies grappling with similar protectionist challenges that decisive and coordinated action is both possible and necessary.

Beyond its economic implications, the dispute represents a complex chapter in the broader India-U.S. relationship. While the two nations have deepened cooperation in strategic areas such as defence, digital technology, clean energy, and semiconductors, trade has remained a persistent source of friction. India’s decision to approach the WTO reflects a calibrated strategy of asserting its economic sovereignty while continuing to engage the United States on areas of mutual strategic interest. It highlights the careful balancing act required in contemporary international relations, where nations must manage both collaboration and contestation.

Trade analysts view India’s proactive approach as a necessary assertion of sovereignty in an increasingly protectionist global environment. They emphasize that passivity in the face of unilateral trade restrictions not only harms immediate economic interests but also weakens a nation’s long-term credibility in advocating for a fair, rules-based international economic order. By challenging the Trump-era tariffs, India signals its readiness to protect its industries and workers, irrespective of the size and influence of the opposing country.

In anticipation of prolonged WTO proceedings, the Modi government has reportedly prepared a list of U.S.-origin goods on which it proposes to impose retaliatory tariffs if the dispute remains unresolved. These retaliatory measures, aimed at politically sensitive American exports such as apples, almonds, motorcycle components, and select dairy products, are intended to create domestic political pressure within the United States. Such a strategy not only safeguards India’s economic interests but also signals New Delhi’s willingness to use reciprocal tools in defence of its trade rights. The broader global implications of this dispute are significant. The Trump administration’s move towards unilateral trade actions, continued under varying forms by the Biden administration, has encouraged several advanced economies to pursue protectionist policies under the pretext of national interest. This has created an increasingly fragmented and uncertain global trade environment. India’s WTO challenge, therefore, resonates with the wider Global South’s concerns about the erosion of multilateral trade governance and the growing economic marginalisation of developing countries.

By standing up to one of the world’s largest economies, India reinforces the principle that no nation, irrespective of its economic might, is above international trade norms. It also champions the cause of restoring fairness and predictability to global commerce, a cause vital for the sustainable development of emerging economies. The challenge additionally sets a precedent for other countries facing similar restrictions to adopt a more assertive, coordinated response through established international institutions.

The eventual outcome of this trade dispute remains uncertain. Given the ongoing paralysis in the WTO’s Appellate Body and the United States’ reluctance to submit to multilateral adjudication processes, there is a risk that the matter may remain unresolved for years. However, India’s move ensures that the issue remains active in international forums and compels the United States to engage substantively on the matter, either through WTO processes or bilateral negotiations.

This episode also holds valuable lessons for future Indian trade diplomacy. It underlines the importance of early, proactive engagement with global institutions in defence of national interests, rather than excessive reliance on personalised diplomacy. The episode affirms that strong strategic partnerships can coexist with firm economic contestation and that India, as a rising global economic power, is prepared to navigate these complexities with confidence and maturity.

In the final analysis, Prime Minister Narendra Modi’s decision to formally challenge the United States at the WTO marks a bold assertion of India’s economic sovereignty and commitment to a fairer international trading order. It underscores India’s evolving economic diplomacy — one that combines strategic ambition with pragmatic assertion of trade rights. Whether this dispute leads to the rollback of Trump-era tariffs or catalyses broader reforms within the global trading system, it undoubtedly represents a significant moment in India’s journey towards becoming an influential voice in global economic governance.

If resolved constructively, this challenge could pave the way for a more balanced, rules-based economic engagement between India and the United States, reinforcing their strategic partnership while respecting each nation’s sovereign economic interests. If it festers, however, it may reaffirm concerns about the future of multilateralism and the deepening fractures in global trade governance. In either case, Modi’s WTO challenge against Trump-era tariffs will be remembered as a defining assertion of India’s place in the evolving world economic order.