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India informed the World Trade Organization (WTO) on Monday (May 12) of its proposed retaliatory tariffs against the US, in response to the duties on steel and aluminium.
The US President landed in Riyadh on Tuesday morning, kicking off a three-nation tour that will also see him visiting the UAE and Qatar. The trip is expected to highlight his renewed global outreach policy, seeking exceptional investments in the US for better bilateral relations.
In a document submitted to the WTO, India identified the American metals tariffs, effective from March 12, as “safeguard measures”. The WTO’s Agreement on Safeguards (AoS) identifies safeguards as protectionism that a member country may invoke if it determines that certain product imports are significantly large and may “cause or threaten to cause serious injury” to the corresponding domestic competitor.
The same agreement lays out terms for concessions and obligations to be complied with, as well as reasons to suspend the same. India has thus invoked its right to suspend ‘concessions and other obligations’ described in Article 8.2 of the AoS.
The document says that the tariffs affect $7.6 billion worth of Indian exports into the US, on which $1.91 billion would be collected as duties. Therefore, India’s “proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the United States,” according to the document. It is currently unclear what US products would be targeted.
This move is not unprecedented for India. In 2019, Bloomberg reported that India had imposed retaliatory customs duties on 28 American goods, in response to Trump’s 2019 decision to end trade concessions on $5.7 billion of goods shipped by India to the US.
US Treasury figures released Monday revealed that Trump’s tariffs generated an additional $15 billion in government revenue in April. Incidentally, April was also the month with the largest increases in US tariffs: the 10% duty on all American imports effective from April 5, and the escalating Chinese tariffs amounting to 145% by April 9.
The US and China announced a 90-day pause on tariffs over the weekend, effectively reducing mutual tariffs by 115% each. Further, the US President Monday announced an executive order slashing the prices of pharmaceutical drugs in what he described as the ‘most-favored-nation’ pricing model.
Despite this, economic growth in the US would likely be slow and prices high, according to Federal Reserve Governor Adriana Kugler. “Trade policies are evolving and are likely to continue shifting,” she said Monday. “Still, they appear likely to generate significant economic effects even if tariffs stay close to the currently announced levels, and the uncertainty associated with these tariffs has already generated effects on the economy through frontloading, sentiment and expectations.”
This follows the Fed’s decision to maintain the status quo last week, opting not to trigger inflationary risks by slashing interest rates.
Investors will also be keenly watching the US inflation report after its release on Tuesday, with the data released by the Bureau of Labor Statistics expected to reflect the first signs of the impact of Trump’s tariffs. A Bloomberg survey of economists indicated a rise of 0.3% in the Consumer Price Index (CPI) from March, after falling the previous month. However, the impact would be contained, given that most imports reached the US before the tariffs became effective.
Trump’s visit to the Middle East, beginning Tuesday, is expected to unveil a series of deals in security. This marks the second foreign visit of his second term, which he will begin by attending the Saudi-US Investment Forum. Notably, the current trip does not include a scheduled visit to Israel, a long-time US ally. However, he may visit Turkey to mediate a possible ceasefire deal between Russia and Ukraine
Trump is looking to secure $1 trillion in Saudi investments, including offering the kingdom an arms package worth over $100 billion, according to a Reuters report. A landmark agreement on trade and defence, underway last year, was put on the back burner over Saudi insistence that Israel commit to granting Palestine statehood. Another key goal for the kingdom is US support for a Saudi civil nuclear programme, hinged on its ability to enrich Uranium domestically, according to CNN reporting.
CNN also reported that the US had announced a weapons sale of over $1.4 billion to the UAE days before the visit. The UAE has committed to spending $1.4 trillion in US investments over 10 years. The UAE visit will likely yield trade announcements in AI, semiconductors, manufacturing, and energy.
Of the three nations, the US maintains the most formalised security ties with Qatar, and had signed a ten-year agreement last year to extend American military presence in the country. According to CNN, the Al Udeid Air Base, located in the desert southwest of Doha, is the biggest US military installation in the Middle East and can house more than 10,000 American troops.
