Trump's Steel Tariffs Make A Case For Safeguard Duties In India

On Feb. 10, US President Donald Trump announced 25% tariffs on all steel imports, without exceptions or exemptions.

While the direct impact of restrictions on Indian imports is limited due to our minimal steel exports to the US, the industry could face pressure from the re-direction of steel exports from other Asian suppliers like Japan and South Korea.

This makes the Indian steel industry's demand for safeguard duties against cheap steel imports all the more necessary.

As per Morgan Stanley, the US accounted for only 1% of India's steel exports in the fiscal ended March 2024, which means the impact of the 25% tariffs on the metal will be limited. However, the tariffs will have an implication for steel prices outside of the US, putting India's trade with other countries under pressure.

As per ICRA Ratings, around 6% to 7% of global steel trade flows from major exporting countries like Canada, Brazil, the European Union, Mexico, South Korea, and Japan will be directly impacted.

The rating agency notes that steel product deliveries amounting to 4 million tonnes per annum to the US from Asian suppliers like Japan and South Korea could be partly bounced-off to high-growth markets like India.

The Indian steel industry has been under pressure due to cheaper steel imports from China and Vietnam since the previous fiscal. So far in FY25 these two countries have accounted for around 35% of India's total finished steel imports.

Now, in the light of the latest US restrictions, India could face additional, cheaper imports from countries like Japan and South Korea. Due to free trade agreements with the two countries, ICRA notes that India's import pressures from South Korea and Japan could increase in the fiscal ending March 2026 as they search for alternate markets for their earlier American cargoes.

This can exert pressure on domestic steel prices, pulling down the industry’s earnings further in the coming fiscal.

In September 2024, the Indian government initiated an anti-dumping investigation into steel imports from China and Vietnam, and has been looking to enforce "safeguard duty" of around 25% against these imports. As per Jayant Acharya, joint managing director and chief executive officer at JSW Steel, the duties were expected in the recently concluded first two weeks of February.

However, the industry is still waiting for the announcement, reports had cited Tata Steel CEO TV Narendran saying.

The analysts also expect a lower safeguard duty to the tune of 10% to 15%, and not the 25% being demanded by the industry.

Any import safeguard duty above 5% would be positive for the Indian steel industry, as per Morgan Stanley. The implication would help bring domestic steel prices up which would help margins and capex investment of companies. Nuvama Research expects the potential duty to allow domestic steel players to hike their prices by Rs 2,000–2,500 per tonne.

As per analysts, companies with a greater share of flat steel products in their product mix could benefit more from duties. Morgan Stanley notes that a 15% safeguard duty may drive domestic hot rolled coil (steel) prices up by 10%. This would take up the FY26 Ebitda estimates of companies like JSW Steel, Tata Steel, Steel Authority of India and Jindal Steel & Power by 15-40%.

As per the brokerage, JSW Steel stands to benefit the most due to a high share of flat products and volumes support.